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Outlook: Residential

METHAMPHETAMINE AND THE HOUSING MARKET

Methamphetamine, more commonly called ’P’, ‘crystal meth’ or ‘meth’, is a Class A controlled substance under the Misuse of Drugs Act 1978. This classification means meth attracts the highest penalties for manufacture, trafficking, sale and use.

As awareness grows, property professionals are becoming more conscious about the significant dangers involved in dealing with meth-contaminated properties. Some property professionals believe the time has come to be proactive. The risk to owners and other property professionals in unknowingly dealing with contaminated properties is too great to ignore.

Meth harms the innocent by contact. Meth is a crystal that vaporises when heated, as in smoking. The vapour clings to surfaces and reforms as crystals. People who come into contact with these surfaces can ingest the meth through their skin or by touching contaminated surfaces then touching their mouth, nose or eyes. Short-term effects from exposure to meth include rashes, headaches, nausea, dizziness, fatigue, shortness of breath, and burning to eyes, skin, mouth and nose. Longer-term exposure can lead to cancer; brain, kidney and liver damage; miscarriage and birth defects.

Identifying Meth Use and Manufacture in Properties

We understand property managers are now getting regular requests from prospective tenants for ‘meth clear’ properties. As the awareness grows throughout the community, real estate agencies are seeing the demand for meth testing of properties on the market for sale. This testing is fast becoming standard as part of the sale and purchase process. Some positive test results are being returned, mostly showing low level contamination caused by use as opposed to manufacture.

Nationally, a lack of guidelines exists regarding meth contamination especially in the property profession. Professionals are learning as they go and creating guidelines to help identify and deal with the meth problem. The Ministry of Health has advised contamination above 0.5 micrograms per 10 cm2 sample area is an unacceptable level for occupation of residential property.

Residential property managers believe it is time to meth test every property between tenants. Meth testing between tenants is the only way to establish:

  1. a baseline level; and
  2. liability against a tenant in the event of contamination being identified in the future.

Regular testing will allow marketing the property as ‘meth clear’ and will therefore ensure quality tenants are attracted. Meth testing will also act as a deterrent to meth users who will not want to be held liable
for any contamination damage at the end of their tenancy.

Indicators of people manufacturing or using meth include:

  • Chemical odours and dead vegetation around a section;
  • An increase in visitors, combined with houses being outfitted with elaborate CCTV systems;
  • Visible stains on curtains, walls and ceilings;
  • Waste material including empty medicine packaging, paint thinner containers and coffee filters with white or red powdery substances; and
  • Residential tenants who pay with cash only.

Meth testing businesses have become more common. Meth testing rates for owners for an initial ‘base line’ test for an average three-bedroom house will cost between $160 to $200. This test will give a composite reading of all the samples taken (usually 8 in an average house) and is required to be under the Ministry of Health guidelines of 0.5 mg.

The results typically take seven days from the date the sample is taken. Following this test, a quantitative test may be required. 
A quantitative test will determine the levels of contamination and which rooms or areas of the dwelling require remedial work. These tests cost about $900 and can be completed only by an independent accredited laboratory.

Most property owners have insurance. Property owners should be aware of what their insurance policy will cover for meth contamination. The insurance industry is also in a steep learning curve as more and more properties are being tested. The amount of cover by companies and policies vary greatly. There are large variations in the amount of cover offered by different companies and policies.

Remediating Meth-Contaminated Houses

In the past few years, property managers have been monitoring the effects of meth manufacture in residential properties. Locally, most property managers have not experienced any manufacturing in the properties they manage. This finding will be due, in part, to the comprehensive background checks property managers do on potential tenants. 

Under the Health and Safety Act, a landlord becomes a PCBU (a person conducting a business or undertaking) and, as such, has a primary duty of care that includes the safety of all persons on site (the rental property). This duty extends to property managers who also receive detailed and regular training from the police and associated specialists.

Like most residential property managers, Duke & Cooke valuers  are unaware of any meth manufacture  in the properties we have inspected and valued. That is not to say we have not unwittingly been exposed to contaminated properties.

Property values may be affected by meth contamination. We have heard about houses having had wall and ceiling linings, insulation, window furnishings, carpet, electrical fittings and other fixtures and fittings removed as part of the remediation process. Some of these meth-contaminated houses are having significant remedial work carried out, and some are not.

If a property is insured, the insurance company will normally take over the remediation process. It is in the insurer’s interest to get the dwelling remediated as quickly as possible. Once a house has been fully remediated,  another test is completed to ensure it is safe for re-occupation.

Does Contamination Affect House Sales?

So how do prospective purchasers know  if a house has been contaminated with meth? There is no requirement for an owner to report meth contamination to a third party, like the local council. In a small city like Nelson, word of mouth soon identifies contaminated houses. If owners don’t divulge information, then neighbours probably will.

Under normal market conditions, if a remediated house goes on the open market for sale, it could be tainted. Some prospective purchasers will be uncomfortable with the thought the house was previously contaminated. Once aware of this issue, a prospective purchaser may lose interest in the property or may have a lower expectation of the market value. For others, it may not be an issue if a confirmation test is provided.

Currently, we have yet to see how the market will react to homes that have been contaminated with meth as there have been insufficient sales evidence to provide any indication. We believe it will be very difficult to identify one single issue like past contamination, as properties have many differing features. The nature of these features will dictate what priority prospective purchasers place upon them.

How can the Property Market Help Control MEth Use?

As the wider community becomes more educated about and aware of the effects of meth, the rate of instances affecting property owners will decline. Currently, the number of properties being contaminated by criminals abusing meth is too high and the resulting affect too great.

The long-term aim of property professionals must be to eliminate meth contamination in properties. The long-term aim of the whole community must be to eliminate meth use and manufacture. With everyone working together for the same long-term objective, this result may be achieved.