Home Info Centre Drug labs in rentals: The signs to watch out for
Drug labs in rentals: The signs to watch out for

Drug labs in rentals: The signs to watch out for

31 May 2019 4 mins read

This article was last reviewed and updated on 30 July 2020

Nice, unassuming private rental properties in residential areas hold lots of appeal for all kinds of tenants… including organised crime gangs looking to set-up illicit drug labs. Do you know the signs to watch out for?

COVID-19 has presented a lot of challenges for landlords, with a moratorium on evictions for rent arrears, reduced rents, broken leases and higher vacancy rates. The pandemic has also thrown a spanner into the works for organised crime gangs who have found their international drug trafficking and domestic supply chain operations curtailed by border closures.

So what does one have to do with the other? Well, the transport bottleneck has led to more clandestine labs being set up to manufacture drugs locally – and private rental properties are often targeted by gangs. With landlords facing a tough market, the temptation to scrimp on prospective tenant checks, to quickly secure rental income, can expose owners to the risk of turning over their investment property for use as a drug lab.

But even for the most diligent of landlords, there is no fool-proof way to foresee a tenant turning a home into a clan lab. Organised crime is very adept at getting around normal screening protocols, like reference checks, and frequently uses ‘dummy’ prospective tenants to secure a lease. But there are a few red flags you can look out for...

Before a lease agreement, watch out for:
  • Prospective tenants disinterested in the features of the property, like the kitchen, bedrooms and bathrooms which are normally of great interest, or surrounds such as proximity to public transport, schools and shopping (as the ‘cooks’ rarely live on the premises)
  • Potential tenants willing to pay rent months in advance – and in cash
  • Rental applicants who attempt to avoid background checks
  • Applicants willing to install extensive security at their own cost
During the tenancy, be alert for:
  • Locks being changed without permission
  • Excessive fortification such as security systems, barbed wire fencing, CCTV, window bars, guard dogs or deadbolts/alarms on internal doors and blacked out windows
  • Modifications to the property’s plumbing, electricity or ventilation
  • Appliances such as extractor fans or pool-cleaning equipment in odd locations or unnecessarily onsite
  • Modifications to sheds such as new locks, extension power cords running from the house, false partitions or access blocked and surrounding areas enclosed
  • Smoke detectors disconnected/removed
  • Light bulbs removed (sparks can cause explosions)
  • Curtains always drawn
  • Chemical odours (acetone, ammonia or ether) and suspicious run-off in nearby drains
  • Dead vegetation or burn pits in the yard
  • Substantial spike in utility costs or tampering with meter boards
  • Large volumes of chemical containers/drums (labelled solvent, acid, flammable), garden fertiliser, drain cleaner, baking soda, tin foil, paint thinner, broken open lithium batteries, gas cylinders, pipes and hoses or empty tablet blister packs stockpiled onsite or dumped nearby
  • Evidence of laboratory equipment such as beakers, flasks, test tubes or pH testers
  • Chemical stains around the kitchen sink, laundry tub or toilet
  • Premises not appearing lived in e.g. no furniture or personal effects
  • Residents burning rubbish
  • Complaints from neighbours about unusual behaviour, visitors to the property late at night, and suspicious comings and goings
  • Neighbour concerns about strange smells, interior lighting or noises like the sound of constantly running water/fans/pumps
  • Occupants eating, drinking and smoking outdoors regardless of weather (due to fumes inside)
  • Tenants regularly avoiding/postponing/cancelling property inspections

If you suspect a rental property is being used as a drug lab, do not attempt to enter the premises (booby-traps are not uncommon) or confront the tenants – call the police. If your suspicions are confirmed, get in touch with the property’s insurer to start the restoration process as soon as the police give the go-ahead.

Legislative requirements for evicting tenants vary in each state – some don’t require a notice period when a tenant has used the property for illegal purposes, whereas others require the tenant be given notice and time to remedy. Follow the right procedure in your jurisdiction and keep the insurance provider in the loop.

The consequences of finding that the rental property has been used to manufacture illicit drugs like methamphetamine, cocaine, ecstasy or GHB can be devastating. Fire and explosions are not uncommon and even if the property survives the actual ‘cooking’, expensive forensic cleaning is needed to re-instate the premises to a habitable condition (and finding tenants may be difficult if your state tenancy or real estate legislation requires you to disclose the fact it was used as a drug lab).

The cost of repairing damage and remediating a contaminated home can stretch into the tens of thousands of dollars – and it’s a cost many landlords face alone. Often, landlord insurance policies exclude claims relating to drugs, whether it is a blanket exclusion or one related to a premises being used to generate income or used for illegal purposes.

EBM RentCover is one of the few landlord insurance providers that protect a landlord’s investment property by covering drug lab clean-ups (up to $65,000 to cover damage to the building and contents caused by meth labs or hydroponic set-ups). It’s just another way we help landlords and property managers feel confident in their insurance provider.

Main photo by Khoa Tran on Unsplash

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions. 


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