Media is hyping up meth houses as potentially being take two of the leaky homes saga. Graham presents some tips for landlords on getting your insurance on track to reduce the risks of being stuck with a meth house rental.
If you search on Stuff.co.nz for “meth houses” you come up with a long list of headlines. One of the top five is the Real Estate Institute’s comment that meth houses could be as big a problem as leaky homes in the future.
That’s a big call and I don’t know if I agree with it. But it certainly emphasises the fact that meth houses are a growing problem that we, as landlords, need to be aware of and manage.
One of the main things to consider with the risk of meth houses is how your insurance company treats the issue.
Firstly, your insurance company needs to know that your house is tenanted in the first place. Second, make sure you have landlord’s protection cover and/or extensions that cover you. Third, it is imperative that you inspect the property every 90 days and that there is documented evidence of this (a property inspection report). If there is not, you may well not be covered.
All this emphasises the point that it is a good idea to have your property professionally managed (I know of very few, if any, private landlords who are disciplined enough to do regular inspection reports). And, to put it in context, giving up 10 per cent of your annual rental to a property manager looks pretty cheap in the face of potentially being hit with a $30,000 meth clean up bill.
My prediction is that, in the future, tenancies will need to have a certificate of meth cleanliness and these may well accompany house sales. In the meantime, cover your basis with good insurance and regular property inspections.
Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.