I bought a meth contaminated property and lived to tell the tale.

A man in the know told me that 40% of Auckland rentals are contaminated (at some level) with methamphetamine. This is a sobering thought for anyone considering buying a property. If you haven’t already faced this problem, it could be just around the corner. And what will you do if you find yourself moments from going unconditional on a property contaminated with Methamphetamine? We did.

My husband and I have been looking for a little over 6 months to add another rental property to our modest portfolio before the LVR changes hit home. We struggled against the wave of first homebuyers, against other investors and rising house prices. But aside from adding our meth test clause to over 20 sale and purchase agreements (as a matter of standard practice) we really didn’t give two thoughts about the possibility of buying a meth contaminated property. We finally found the perfect place and our offer was accepted. Building report, valuation, and existing quality tenant on a sharp rent. Lovely! Last thing to come in was the meth test, positive at .09µg per 100 cm squared. And I sat there, looking at the report and the words that raced across my mind were simply “what does that even mean”. Pandora’s box opened.

I phoned the only man you can speak to in this situation, Miles Stratford from Meth Solutions. Here are the nuts and bolts of what I took from the conversation;

  • Any trace of meth, requires detailed house meth testing. This can set you back between $1,000 and $3000 of hard earned cash depending on who you get to do it.
  • The 0.5µg per 100 square cms is the currently acceptable guideline figure for habitation of a property established by the Ministry of Health in 2010 benchmark.  (so ours was just under 20% of the benchmark)
  • Clean up of meth contamination can be done but comes at a cost but with very low readings, (like .09mg per 100cm sq which our property was), often painting is the best approach. (NB: Where higher levels of meth are found, painting is the worst thing you can do and can end up causing all sorts of unnecessary drama)
  • The tenants were happy for us to test the property (which could imply innocence) and have had no adverse (that we witnessed) reactions or symptoms of meth contamination. 
  • There was no evidence of meth use or production at the property.
  • The level of contamination suggests personal use not manufacture.
  • The insurance company did not impose any restrictions or limits on our insurance policy (including against methamphetamine exposure). Always best to be upfront with them from the onset.
  • The contamination will not be recorded on our LIM.
  • The contamination did not affect our valuation.

We asked for an extension on settlement, took the weekend to consider it and decided to buy it. We bought the best insurance policy with full cover and settle next week. We have also decided to meth manage the property with a Methminder and regular testing. Time will certainly tell if this problem is increasing and manageable.

We remain committed to helping our clients grow their wealth through investing in property, however investing in anything has an element of risk. Is it better to have a measured risk you know about? And what will the future of rental property be in New Zealand? Does meth contamination pose the same risk and monumental losses we saw with the $11.3 billion clean up cost of leaky homes? Could it exceed it? As investors these are questions we all need to consider.

If you would like our methamphetamine clause for your Sale & Purchase agreements, or to discuss any of the above contact me on natalie@wendellproperty.co.nz.