Frank Newman: P for problem

Methamphetamine (P) is a problem. The media is reporting with increasing frequency tales of woe and financial misfortune. There is no doubt the P problem is growing and may have serious financial consequences for landlords, homeowners, and tenants.

It is reported that 279 Housing New Zealand (HNZ) rentals tested positive for meth in the nine months end December 2015. Five of the houses had to be demolished, and meth related remedial work is costing HNZ about $13 million a year. Some say meth contaminated homes could run into the thousands.

I urge all landlords to undertake regular testing, and where a property manager is looking after a tenancy, they should require their manager include meth testing into their inspection regime.

But landlords are not the only ones who should carry out testing. Those buying a home should include a clear meth test as a condition of purchase, and tenants should require written confirmation that the property is free of drug residues before committing to a new tenancy. 

There's no excuse for not meth testing. Test kits are readily available online and are relatively inexpensive. According to the owner of mednz.co.nz buying the test kit refills is the most economical way to go. A kit of 10 swabs costs $150. The number of swabs needed per test is debatable, but four sample points in a house would appear to be reasonable. The most likely areas to sample are the kitchen, bedrooms and hallway.

In terms of when to test rental properties I would suggest:

1. The first test to be done at the start of a tenancy, or at the next inspection of an existing tenancy. Test with the tenant present so the tenant knows regular testing will be done and there is no disputing the results, which should be noted in the inspection report.
2. Each sample should swipe one wall or surface per swab. Using one swap to do multiple swipes is likely to produce an exaggerated result.
3. Test during the regular (quarterly) property inspection where contamination is suspected.
4. Test during the final inspection of the tenancy, again in the presence of the tenant. Photograph the swab results, and provide copies to provide to the incoming occupants/tenants.

One thing to keep in mind is that the kits are designed as a screening test only.  If the result shows the presence of meth then a full  test should be carried out by a testing specialist. The type of exposure to the property, from use through to manufacture, will have a significant impact on the remedial work required, which can be from $1,000 to demolition.

Whether the remedial cost is covered by insurance will depend on the wording of your insurance policy. Most policies should include an “unlawful substances” clause, but it is conditional on the property manager complying with the “landlord obligations” stated in the policy. Those obligations are likely to include:

• Exercising reasonable care in the selection of tenants by obtaining satisfactory written or verbal references, and
• Undertaking an internal and external inspection of the property at least once every four months and whenever there is a change of tenancy, and
• Keeping a written record of each inspection.

If you don’t meet those obligations a claim is likely to be declined. All landlords should check the fine print in their Home Insurance Policy to see if they have cover, or give their insurance broker a call.

This yet again shows the importance of managing your property professionally, or having a professional manage it for you if you do not have the time or know-how to do it properly yourself.

If you are having your rental investment(s) managed by a professional ask them:

• What they do to manage the meth risk for your property,
• Whether they test for the presence of meth, and
• Do they inspect the property at least once every four months.

HNZ is becoming more diligent about detecting meth in its properties. That may well result in clandestine labs relocating to private sector rentals, so those managing a rental need to be much more vigilant than they have been to date. Landlords need to wake up to the fact that it is they who would be liable for the decontamination costs and potentially liable for damages should a tenant need to vacate a property due to contamination, even if the tenancy is managed by a property manager.