Methamphetamine in Properties: What you need to know if you own a property 19 Oct 2016

The media has been reporting about the increased use of Methamphetamine.  This article outlines how it could affect you!

Methamphetamine is a powerful, highly addictive stimulant that affects the central nervous system.  Commonly known as P, Meth, Chalk, Ice or Crystal, it takes the form of a white, odourless, bitter-tasting crystalline powder that easily dissolves in water or alcohol.  Is a Class A controlled substance under the Misuse of Drugs Act 1978, which means it attracts the highest penalties for manufacture, trafficking, sale and use.

How is Methamphetamine Produced?

Meth is manufactured in secret drug laboratories, known as “clan labs”, which can be found throughout New Zealand in houses, garages, outbuildings, apartments, baches and motor vehicles.

Meth is a crystal that vaporises when heated, eg smoking.  Its vapour sticks to surfaces and reforms in crystals.  Should you come into contact with these surfaces, you can ingest the meth through skin.

Short term effects of Meth include rashes, headaches, nausea, dizziness, fatigue, shortness of breath, burning to eyes, skin, mouth and nose.

Long term effects include cancer, brain-kidney & liver damage, miscarriages and birth defects.  Children are at a higher risk as they are closer to the ground and tend to touch surfaces and then suck their fingers.

Every one kilo of Meth made produces five times the amount of waste.  Indications of Meth waste include staining on grass and yellow staining found near drains.

Issues that can arise once Methamphetamine has contaminated a property

Insurance:        Quite often your insurance cover will not cover the full costs to decontaminate a property.  Statistics released in 2015 indicated that the average insurance pay-out to decontaminate a property was $30,000.00.

Police:             Once Meth has been identified at a property and police are notified, this is recorded on the LIM, even if the property is later decontaminated.

Banks:              Lenders do not always have a clear understanding when it comes to Meth contamination in properties and the consequences of the decline in the property valuations.  If multiple properties are owned, then this can affect the loan to value restrictions (“LVR”), and the lender may request additional funds to be repaid to fall within the LVR rules.

Where are the majority of Methamphetamine Contaminated Properties?

The majority of affected properties are in the North Island, however, it is important to note that only houses which are tested are included in the statistics.

Statistics obtained from testing properties in the North Island show that 1 in 3 properties were contaminated.

Appearances can be deceiving.  You cannot look at a property (or its occupants) and simply assume it is not contaminated. Upmarket properties are just as susceptible to contamination as Housing New Zealand properties or rentals.  An example given at a recent seminar was of an agent giving open homes - every time they attended the property they felt dizzy and light headed, but didn’t think anything of it.  The property was later found to be contaminated.

How you can protect yourself?

Become educated.  Be aware of the issue.  You should be asking yourself “how have you satisfied yourself this property does not have a problem with meth residues?”

If you are presenting an offer to purchase a property, then advise the agent (if one is involved) that you would like an additional clause included, making the contract subject to a satisfactory meth test.

You should ensure that all Meth testing is lab based testing of samples rather than kit tests if you want to avoid Meth affected properties.  Other things to look for:

• Ownership history of the property.
• The state of the property from the outside.
• The state of the property from the inside.
• How you feel when in/after you have been in the property.

Insurance

For the year 2014/2015 insurance companies had paid out an approximate amount of $20,000,000.00 for Meth contaminated properties.

For the 2015/2016 year insurance companies paid out close to $50,000,000.00 to deal with contamination, a massive increase in one year!

There have been suggestions that insurance companies might limit insurance cover for Meth related claims given the increase in claims.

It is important to note that insurance claims will not cover loss of property value and may not cover all soft furnishings.

Protecting existing assets

If you own rental properties, it is important that regular checks are completed to reduce the risk of contamination and also to ensure that your insurance policy will not be invalid.  In many policies this is a specific requirement.
It is suggested that a “MethMinder” be installed in rental properties.  This is a detection and monitoring system, developed and designed in NZ, that can detect if your property is being used to manufacture methamphetamine.  It is similar in size to a smoke alarm and is visible to tenants.  It is a stand-alone self-powered solution which communicates via the national wifi digital cell network, is fitted with multiple tamper sensors and a control room is notified (silently) if interfered with.  Tenants should be informed from the outset of the device, together with consequences and charges they will face if they tamper with the device.  The alarm activation notifies the nominated contact and possibly the police if required – hopefully this will deter tenants!  Costs start at $49.95 per month (2016) and more details can be found at http://www.methminder.co.nz/faq/.
Conclusion – always undertake due diligence before proceeding!