Meth: a pertinent problemOctober 2017

Meth: a pertinent problem

How to safeguard your property against meth.

Property damage from Methamphetamine use or manufacture has been well documented in the residential sector, however awareness of the risk as it impacts on commercial property are less well understood. This despite industry experts seeing high rates of contamination in commercial properties tested. Alarmingly, the proportion of meth labs in these types of buildings seems to be much higher than in residential properties.

Yet public opinion is divided on the gravity of the situation; who can we believe and how can we safeguard our properties? What are the real risks to a commercial landlord in particular?

The new norm

In June 2017, Standard NZS8510 was released and detailed recommendations for sampling, analysis and decontamination relating to methamphetamine. The acceptable post decontamination level has increased from 0.5µg/100cm2 to:
  • 1.5µg/100cm2 in high use areas
  • 3.8µg/100cm2 in low use areas such as ceiling cavities and crawl spaces

Comparatively, in some US states, the levels for high use areas are the same as New Zealand. However acceptable levels in a significant number of other states are lower, with acceptable levels ranging from 0.1µg to 0.5 µg per 100cm2 tested. In Australia, with an arguably larger meth problem than NZ, levels are set at 0.5µg per 100cm2 for residential properties and 10µg per 100cm2 for commercial properties.

While science is used to support all of the limits established around the world, the acceptable level that is established seems to be heavily influenced by the political and economic climate that exists at the time the level is set.

MethSolutions is an industry leader in helping property owners manage risks presented by meth. Director Miles Stratford, points out that currently two thirds of properties that test positive for meth, fall under this new level. This still leaves a large proportion of properties whereby occupation is deemed unsafe.

Is it really that dangerous?

Massey University’s Nick Kim has gained recent media coverage by arguing that the meth contamination industry is little more than a money-making venture & that contamination is completely safe even at the new higher threshold. The New Zealand Drug Foundation has also come out backing Kim’s claims.

Empirical evidence does nevertheless exist and some scientists are working on ‘real world’ studies that support the view that Meth does have serious health effects to those exposed. Common ailments reported include respiratory problems, skin and eye irritations, immune system degradation and behavioural changes.

The truth of the matter is that the jury's still out on the long-term health implications of exposure to the drug; there have just not been enough studies to determine the true risk to occupiers.

Value effect

Regardless of the health effects; p contamination does have a material value effect on a property. Even if a property falls under the allowable level, you’re still not out of the woods. Some purchasers and tenants will not accept any reading whatsoever.

Aside from the evident value effect, meth use and/ or manufacture in a property also significantly increases the risk of an explosion or fire on site.

So what? I own a commercial property...

Many Agents and Landlords I speak to are completely unaware of the extent to which the issue relates to their commercial or industrial interests. When you also contemplate the fact that many buildings are storing stock of significant value inside; the potential for damage is huge.

Miles Stratford notes:

“People often think a meth lab is a complex set up which takes up considerable space. While this can be the case, meth can just as easily be manufactured in a 1 litre soft drink bottle in a couple of hours. So, the time between a property being free of meth and being contaminated by meth manufacture is a matter of hours.

In addition, strong odours which are often associated with meth manufacture can be more easily covered up in a commercial premise, where chemicals and strong odours can be a feature of the work that is carried out on site.

Also, legitimate businesses often have people coming and going at odd hours and/or are located in areas where outside of normal operating hours, there are very few other people around. This allows meth related behaviour to go undetected”.

The devil is in the detail

Until recently, most insurance companies would only recognise claims due to contamination caused by a sudden event such as meth manufacture. Some insurers have since changed to accept damage from meth use as well. However, premiums have subsequently increased to counter their larger risk profile.

However, there are always situations where you will not be covered; we recommend checking with your insurance broker to determine whether your level of cover is satisfactory in the first instance, however we outline some of the more common caveats below:
  • Landlord obligations under your policy must be fully met for a claim to be accepted; unless you can show you are actively and professionally managing your risk as a Landlord, you may be out of luck.*
  • Pay-out is unlikely where contamination has deemed to have occurred prior to purchase.
  • Cover is highly unlikely in the event contamination levels are below 1.5µg/100cm2 as per Standard NZS8510
  • Depending on your policy; landlord and/ or tenant goods stored in the property may not be covered.
  • Most policies will be subject to claim limits and higher excesses.
*IAG’s Meth eBook contains updated information on ‘Landlord Obligations’ as expected by NZI http://www.nzi.co.nz/Documents/Factsheets/IAG%20Meth%20eBook.pdf

So what can I do?

As a minimum, we recommend making meth screening part of your due diligence check when purchasing a commercial premise. The cost is low, in comparison to fixing up the hidden issues it may flush out.

For existing properties, if you have long term trusted tenants, then you may choose to do nothing.

But, given the legislative changes that have taken place and the increased obligations that exist, something to seriously consider is having the P contamination status of a property checked prior to tenanting any vacant space (“Baseline testing”). That way, damage can be traced back to a particular point in time. There are also products on the market that act as monitored alarms, much like that of a fire alarm. They are designed to detect meth manufacture in real time and could be an option for high risk properties.

In the absence of a Baseline screening test, proving contamination arose during the period of a tenancy, is very hard. Remember also that under the Health and Safety at Work Act 2015 (HSWA), Landlords have a primary duty of care to ensure their properties are ‘without risks’ to the health and safety of any person visiting or occupying that property. Without accurate and regular testing, it is impossible to prove that you are not endangering the health of your building’s tenants.

Prevention better than cure

At NAI Harcourts, we pride ourselves on our pro-active approach to Meth Management as part of a wider Risk Management system.
Remember, the difference between no meth and manufacture can happen overnight. This is much less likely if you are actively managing your risk.

Whatever course of action you choose to follow, it should be taken AFTER you have made a conscious assessment of the risk.

Please contact us today for more information.