Property Investment
9 min read
Author: Laine Moger
Journalist and Property Educator, holds a Bachelor of Communication (Honours) from Massey University.
Reviewed by: Ed McKnight
Our Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.
Many property investors think any meth-related activity in a home – no matter the level – will mean their tenants could get sick.
That’s why many property investors ask us, here at Opes Partners, “Should I test my home for meth contamination?”
The answer is generally “no”
Although many think that even a little meth contamination can cause big health problems, new research indicates only heavily-contaminated homes are a risk.
In fact, the prime minister’s chief science adviser wrote a report saying that landlords should generally not test their homes.
But while that’s the research-based view, some landlords still query whether they should get a test or not.
So, in this article you’ll learn what a meth test is, why it has been considered so important in the past, and what the current science says about testing levels.
Do you have a question or comment about meth tests? Feel free to leave your thoughts in the comment section at the end of the page.
Meth – otherwise known as methamphetamine or P – is a powerful and highly addictive (and illegal) drug.
If you’ve seen Breaking Bad, you’ll know that meth is usually “cooked” locally (as in not brewed in Colombian forests), with meth dealers using run-of-the-mill properties as makeshift labs.
Because of the toxicity around the drug itself, and the chemicals used to make it, there is a possibility that a person’s health may be affected if living in a property where meth has been produced or smoked in large quantities.
And if a property has been contaminated, the clean-up and decontamination is expensive.
Kainga Ora (called Housing New Zealand at the time) said that it can cost between $600 and $1800 for meth testing, and up to $30,000 to decontaminate a property. Ouch!
This is why many landlords have opted to get a “meth test”. This means they can prove to prospective tenants their homes are clean. But, also, they can charge clean-up costs to tenants who have damaged the property.
This is why it has previously been the No.1 worry for property investors – as reported in NZ Property Investor magazine.
That seems like a compelling reason to test, so you might be thinking … “Why are you suggesting that landlords shouldn’t test their properties?”
People often get emotional about the prospect of meth contamination. Meth is scary. And (rightly so) public health messaging has tried to scare us into not using it.
But, the question is – at what point is a contaminated house going to make me sick? And what counts as a contaminated house?
Before 2018, a room would be considered contaminated if it had 1.5µg (micrograms) of meth per 100cm2 (or more).
Anything over that was considered to be meth contamination and required fixing (or “remediation”).
So, the threshold for the amount of meth allowed in a home was very small, but the cost to have the problem fixed was huge.
But, in 2018, the prime minister’s chief science adviser, Sir Peter Gluckman, published a report which said those levels (1.5µg/100cm2 ) were too strict.
Gluckman’s investigations stated there is no evidence (anywhere in the world) that says people can be harmed by third-hand exposure to meth residue on surfaces.
He said those low meth standards were making things worse, tenants were being unfairly evicted from their homes, and landlords were spending money to fix homes that shouldn’t be considered contaminated.
For this reason, he proposed:
In the report’s own words:
“Testing is only recommended where meth lab activity is suspected or where heavy use is suspected” … “testing is not warranted in most cases.”
Put simply, unless you think your property may have been used as a meth lab, the science says you should not test.
This is good news for landlords as it means money won’t be wasted “fixing” homes that don’t pose a health risk.
In fact, it’s estimated that over $100 million was wasted prior to 2019 on remediating properties which posed little or no health risk to occupants.
The bottom line: Unless it’s 15µg/100cm2, it’s nothing to worry about.
But if it’s greater than 15 you need to disclose it, and you need to remedy it.
However, these new guidelines didn’t automatically make the stigma around meth contamination go away, and there will still be many worried about the potential health risks of any meth contamination (even if the science says they shouldn’t be concerned).
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.
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.
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.
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.”
If your house has been used as a P-lab, there will be clues.
For instance, meth labs:
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.
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.
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.
Journalist and Property Educator, holds a Bachelor of Communication (Honours) from Massey University.
Laine Moger, a seasoned Journalist and Property Educator with six years of experience, holds a Bachelor of Communications (Honours) from Massey University and a Diploma of Journalism from the London School of Journalism. She has been an integral part of the Opes team for two years, crafting content for our website, newsletter, and external columns, as well as contributing to Informed Investor and NZ Property Investor.
