Exclusive: Landlords omitting P history to protect property values

First National Real Estate chief executive Bob Brereton said contamination - even if remediated - could drop a sale price up to 5 per cent. Photo / Dean Purcell

Some landlords with meth-contaminated houses are avoiding telling local authorities to ensure their houses don't lose value.

The investors say having the information on their property's council file - even if the chemical residue is later removed - carries stigma, and will put buyers off. While the behaviour is not illegal, one home-owner's association said it was "unscrupulous to say the least" not to report contamination, as that meant any future owners or tenants were denied access to the property's full history.

"I think a lot of landlords are scurrying around trying to keep things under the radar because they don't want to spend the money to properly remediate a contaminated home," said Home Owners and Buyers Association (Hobanz) president John Gray.

"But there's a line that has to be drawn somewhere."

The Herald first found evidence of the trend in online property investors' forums, where owners were discussing how to get the council to help evict tenants without the contamination going on a Land Information Memorandum (Lim) report.

Hobanz and Auckland Council confirmed they were aware of the behaviour.

Auckland Council's regional environmental control manager Marcus Herrmann said people avoided reporting contamination for a variety of reasons, including uncertainty about remediation requirements, and the effect on their profits.

"They believe the stigma attached to having the information on their property file will affect the value of their home," he said.

Herrmann said while there was no legal obligation, it was appropriate for landlords to inform the council to ensure health and safety of tenants and prospective owners. Methamphetamine is considered a health risk.

If a house has been a lab, police usually inform the council which then undertakes testing. However, health authorities or private owners who become aware of contamination are also expected to pass on any information.

When residue is present, councils usually place a note on the Lim if the levels exceed health guidelines - currently set between 0.5mcg to 1.5mcg per 100 square cm depending whether the house was a site for manufacture or use, respectively.

Councils update that information when the issue is remediated by a qualified company. While there is no health risk once a property is remediated, Property Investors Federation executive officer Andrew King said he believed having the information on a LIM report would still devalue a property.

"At the moment there's a bit of hysteria around it. There's such publicity that I think people have an irrational fear of meth."

King said he did not think owners should have to report methamphetamine contamination to the council.

"If you do a test and it's over the limit, and then clean it, there's no way it's going to have an effect on anyone living there."

First National Real Estate chief executive Bob Brereton said contamination - even if remediated - could drop a sale price up to 5 per cent.

"In the same way a leaky home has a stigma attached, contaminated houses have a negative public perception," Brereton said.

"They take longer to sell and are harder to tenant. It's a simple reality."

Real estate agents are bound to inform potential buyers when they know a house is contaminated.

Labour housing spokesman Phil Twyford said both landlords and tenants were in a lose-lose situation, and the Government's failure to provide testing standards had been part of the problem.

Currently, the rules on contamination are simply guidelines, but are due to become enforceable "standards" later this month.

"We have to hope those will help," Twyford said.

"People deserve to know the history of their property. There should be testing that can guarantee a property has been properly remediated."

When asked for comment on the issue, Minister for Building and Housing Nick Smith pointed to the Residential Tenancies Amendment Bill (No 2), currently before Parliament.

The Bill does not have provisions about reporting, but will make the new standards enforceable by law.

It will also help ensure tenancy laws better manage methamphetamine contamination, liability for careless damage and the tenancy of unsuitable properties.

'We're not risking health for money'

It was just a little nagging feeling that led Waikato landlord Joanne to test her rental property between tenancies.

"We never thought it would be positive. Although we'd had to evict them for not paying rent, they had small children," she says. "But then I saw something on Facebook and just got a feeling, so we did it."

By the time the test came back - with a result four times the acceptable level - Joanne (last name redacted for legal reasons) had already given the house a coat of paint and found new tenants.

"It was a total shock."

Now, the house is sitting empty while the family battles their insurer to pay for the clean-up, and Joanne is reluctant to tell the council about the issue because she thinks it will carry a long-term stigma.

"It could really affect the value of the property. The issue is, how long is that note going to stay on there? If we get a clear reading will it be removed?" she said.

"I do think it's fair it goes on the LIM but if it's remediated it should be able to be removed completely."

Joanne says while the issue is part-and-parcel of being a landlord, it is hard when she feels she's doing her best.

"We try to rent to families, or solo mums. There are landlords that would rent out a house like ours, landlords with no morals, but we've got it empty.

"I'm not going to put health at risk for the sake of money."