One ‘clan’ you don’t want as tenants

Australia’s illicit drug epidemic is proving costly for landlords.Drug Lab

Toxic chemical residue, fire damage, the aftermath of explosions – these are all potential issues for landlords who discover their rental property has been used as a clandestine drug laboratory (clan lab).

According to the Australian Crime Commission, there were 744 drug labs detected across the country in FY14, with 70 per cent of these found in residential locations.

If a property has been used as a clan lab, it will take more than some spray and wipe and a vacuum to make it safe to live in again, as contaminated homes can pose serious health risks.
In the last 12 months RentCover policyholders made eight claims relating to drug labs, with the payout topping $200,000 – averaging more than $25,000 for each, including costs associated with forensic testing, specialist cleaning, physical damage and loss of rent.
While no-one wants to find out that their property has been used for illegal drug manufacture, the sad reality is that labs are often set up in rentals – from family homes in residential neighbourhoods, to high rise apartments, to rural properties. When it comes to investment properties, be vigilant and look out for these potential ‘red flags’:
Before a lease agreement
  • Potential tenants willing to pay rent months in advance – and in cash
  • Rental applicants who attempt to avoid background checks
  • Willingness to install extensive security at their own cost
During the tenancy
  • 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 (plumbing or electricity) or appliances (such as portable air conditioners and heaters, extractor fans, lights or pool-cleaning equipment) in odd locations or unnecessarily onsite (e.g. no pool)
  • Damage from intense lighting or water
  • Chemical odours (acetone or ammonia) and suspicious run-off in nearby drains
  • Substantial spike in utility costs or tampered with meter boards
  • Large volumes of chemical containers/drums (such as drain cleaner), garden fertiliser, baking soda, gas cylinders, pipes and hoses or empty tablet blister packs onsite or dumped nearby
  • Evidence of laboratory equipment such as beakers, flasks, test tubes or pH testers
  • Premises not appearing lived in or residents burning rubbish
  • Complaints from neighbours about visitors to the property late at night etc. or the sound of constantly running water/fans/pumps or strange interior lighting
  • Regularly avoiding/postponing/cancelling property inspections
If you suspect a rental property is being used as a clan lab, do not attempt to enter the premises (booby-traps are not uncommon) or confront the tenants. In the first instance, contact the police (who will only be able to assist in the criminal matter, not any subsequent tenancy issues). We are here to help if a landlord needs to make a claim for malicious damage or loss of rent while damage is repaired.