What is the official standard in New Zealand?

At the time of writing it is up for debate. Unfortunately there has been a grey area.

Some organisations have adopted Peter Gluckman’s suggestion of 15 µg/100cm2; others are still on 1.5 µg/100cm2.

For example, if you have a Tenancy Tribunal case, unless there is 15 µg/100cm2 your house will not be considered contaminated. You therefore can’t evict your tenants or charge them for decontamination.

Kainga Ora has also adopted this standard.

But some insurance companies are still using 1.5 µg/100cm2. This is because the official standard in New Zealand (NZS8510 as set by Standards NZ) still has anything above 1.5µg/100cm2 as contaminated.

That’s why the government is currently planning to increase the standard to 15 µg/100cm2.

Because of this, we recommend currently viewing 15 µg/100cm2 as the level for contamination. And you should only test if you expect extremely high levels of use, or meth manufacture in your property.

What are the risks of not getting my property meth tested?

In light of this new information, some property investors may choose to not meth test their property.

And while this is our recommendation, it is your choice and may depend on the situation.

For instance, some active investors argue it’s always worth getting a meth test before expensive renovations on a property. Here’s a case study.

Case study – “I wasted $40,000 renovating my property … because of meth”

Here is an example of a property investor who would disagree without recommendation.

Every Thursday, we here at Opes Partners, send out our newsletter (called Private Property).

One week we asked for every property investor’s biggest mistake. Here’s Barry’s reply:

Barry thought his property needed extra TLC after his unruly tenant finally moved out. So, he spent $40K renovating the property. It looked so fantastic he figured it might be an opportune time to sell.

But then the real estate agent requested a meth test as a part of the usual due diligence. It came in over 400µg/100cm2. The maximum threshold is 15.

There was no doubt this rental was being used as a cook shop (meth lab). So, the entire house had to be gutted – including all of his new renovations. All the new carpet and the blinds went in the bin.

And the insurance wouldn’t cover it either. Insurance only covers the decontamination and part of the refurbishment, but it caps out at $30k.

For Barry, this was a $40,000 mistake.

So from Barry’s experience, he would recommend testing before doing expensive renovations, just in case.

And while the science suggests that level of testing is unnecessary (since it is statistically unlikely that your house was used as a meth lab), it’s understandable that some investors don’t want to run the risk.

What are the risks of getting my property meth tested?

But, there are also currently risks of getting your property tested.

According to Tenancy Services (an official government agency), if a landlord rents out a contaminated property, they may be breaching the Residential Tenancies Act.

But, as discussed, there are two different standards for what is considered contaminated.

So what do you do if you test your property and it comes back between 1.5 – 15µg?

Do you tell your current or potential tenants? And risk losing them (even though the science says it is safe).

Or do you not tell them because the science says there’s no risk (and the tenancy tribunal would agree)?

That’s the ethical conundrum. And that’s why some property investors say – “I’d rather not know. I’m only going to test if I think there has been a meth lab.”

How do I know if my house has been used as a meth lab?

If your house has been used as a P-lab, there will be clues.

For instance, meth labs:

• Are often hidden behind false walls, so if you see a room that is unexplainably small, there may be a meth lab hidden in the room.

• Require extractor fans. So if you see an extractor fan in a weird space, or a room with power points in odd places, that could be a sign of a P-lab.

So, if you’re walking around your newly-empty rental, and you find a false wall in the bedroom as well as some newly installed wall fans … it might pay to get a meth test done.

Or if you are a soon-to-be buyer and you have a strong suspicion that a property you’re interested in has been used as a cook shop, you can make a meth test a condition of your offer.

Am I an irresponsible landlord if I don't test my property?

No. It’s important to take into account new evidence, particularly science-based evidence.

And the most recent, science-based investigations state testing is only recommended where meth lab activity or heavy use is suspected.

Let’s be frank, the chance of your property being a meth lab is slight. There were 74 meth labs in 2016, of which two thirds were rentals. So, that means there’s at least 0.01% of rental property identified as P-labs, which is a low number.

To test or not to test … should I test my investment property?

Here at Opes Partners our view (and the research-based view) is that landlords do not need to test their properties for meth contamination.

The only case where you should is if you think there has been a meth lab present.

There are some investors who will choose to test anyway, but this is their personal choice.