Not So Crystal Clear

Posted by Jack Vale on March 9, 2017 8:00:00 AM NZDT
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Landlords beware! Reports show that there is one methamphetamine case hitting tenancy tribunal every week. It is currently one of the  biggest threats to the returns of your rental property. Like most things that we’re worried about however, our fear stems mostly from a lack of understanding. So what do you need to know about crystal meth and the implications of someone using this harmful drug in your rental  property?

Most people have heard of crystal meth or ‘P’. There is no doubt that it is one of the most harmful drugs in New Zealand. It is no surprise then that the presence of meth in a number of homes is beginning to become a matter of huge concern for the government. Currently standards dictate that houses are habitable when there is less than 0.5mg of crystal meth per 100cm² of surface area. It is how-ever, only in recent years that meth has become a predominant issue, with New Zealand’s leading insurance company IAG now seeing sixty cases of meth related property damages each month.

Insurance companies across the board and the Tenancy Tribunal appear not to have a definitive ruling on metham-phetamine. It now seems that the cries of landlords have been heard with more regulated standards on the horizon. The draft standards, written by the standards NZ committee, surrounding contamina-tion went to public consultation prior to Christmas and closed in February.



The results from the draft will be set around May this year, and they will likely see the safe reading level increase from 0.5 micrograms to 1.5 micro-grams/100cm² in carpeted properties, while uncarpeted properties will see a safe level of 2.0 micrograms/100cm². With a more defined standard, it will now be much more black and white for the Tribunal and insurance companies to advise landlords on what to expect should traces of the drug be found in their property.

Despite this, IAG whose subsidiaries include State, NZI, and AMI released a statement on March 2nd 2017 outlining the changes in their policy surrounding insurance claims. In most cases, insur-ance will cover the damages. A limit will be placed on pay outs up to $30,000. With this, excess amounts could increase from $400 to $2500.

Most importantly, your claim could be re-jected for a number of reasons. Improper management, the presence of family at the property, or if the contamination date was outside of the dates of your insurance policy could all be reasons for the insurance companies to refuse a pay out.

What about the Tenancy Tribunal? Meth contamination can surely not be passed off as accidental damage under the Osaki ruling. If you are able to prove beyond all reasonable doubt that the contamination in the property is as a direct result of the tenants, then under section 40 in the Residential Tenancy Act- the tenant is liable to pay exemplary damages and cost of repair. The only way to prove this is by having pre and post tenancy meth tests.

There is no doubt then that more regulated and definitive rulings on meth will be welcomed by landlords across the country. For now though, it seems as though the grey area will remain. By using a professional property management company, you can be sure that they will be constantly monitoring the changes in legislation and keeping you up to date.

To see if a property management  company might be right for you, give Jack a call on 04 979 6363.



Topics: investing, maintenance