Real Estate Training Solutions

When your property has been turned into a drug lab...


In a recent report [1] by EBM (an insurance provider that specialises in landlord insurance) they shared the following examples of severe damage to properties following tenants secretly growing and manufacturing illicit drugs including cannabis, methamphetamine, ecstasy and GHB.

  • After the Property Manager(PM) was notified police had raided the house and found a hydroponic set-up, an inspection revealed holes cut in the walls and ceilings throughout the home. There was vent tubing, additional wiring and chains hanging from the ceilings – and hundreds of empty pots. The main power supply had also been altered and the home had been flooded, destroying the flooring. The policyholder received the maximum damage payout of $65,000 plus an additional $9,000 for loss of rent. 

  • In another property, despite only one room being turned into a grow lab, the damage bill topped $18,000. In addition to the one room damaged from the growing operation, the tenants had also altered the power supply, requiring the home to be re-wired and the main power box to be replaced. The landlord received a further $3,400 for loss of rent.

  • A landlord was paid out more than $42,000 after a drug lab had been found at the property. The cost of the forensic clean-up topped $25,000 and $12,000 was paid for lost rent; the balance of the claim went towards repairing damage including replacing benchtops and a dishwasher.

  • The PM had noticed an odd smell coming from the rental and notified police they thought the premises was being used to manufacture drugs. The police raid confirmed the apartment had been used to operate a chemical lab. The $25,000 claim included costs for forensic testing and specialist cleaning, lost rent while the apartment was uninhabitable and damage.

Managing agents that are well trained and have attention to detail should be able to avoid most of these issues, however, not everything goes to plan and sometimes, no matter how careful the agent is, events cannot be controlled. It is important to convey to landlords the importance of having appropriate and adequate insurance.




August 13, 2019