Illegal cannabis farming: A growing problem for landlords
The industry has seen a significant increase in the frequency of claims arising from the illegal cultivation of drugs in domestic properties and the problem is only getting worse.
“Cannabis cultivation” describes the practice and process of cannabis production. Illegal cannabis farming is when a property is used to illegally grow cannabis in large quantities. The illegal cultivation of cannabis is a growing problem for both residential and commercial landlords as well as the wider community.
The threat of illegal drug cultivation to landlords
According to a report published in 2018 by the Institute of Economic Affairs, the black market in illegal cannabis in the UK is estimated to be worth £2.6 billion per annum, with 255 tonnes sold to over three million users.
In previous years illegal cannabis cultivation often took place in large industrial units. More recently smaller scale farms are being established in residential rental properties. The threat of tenants using residential properties for the manufacture and harvest of illegal drugs is one of the biggest challenges facing private landlords. Additionally as a result of lockdown and tough economic conditions, there has been an increasing number of unoccupied commercial properties which have been vulnerable to break-ins for the use of illegal cannabis farming.
Illegal Cannabis Farms – A growing problem
Illegal cannabis cultivation presents a significant risk of damage and costs to the property owner from fires, explosions, damp and mould, escape of water and structural damage – and to the disadvantage of landlords, cases are on the rise. These leave property owners with severe damages to repair, significant costs and often result in loss of usage and diminished revenue from their assets.
Analysis of data from regional police forces confirms the extent of drug manufacturing and cultivation in the UK. It reveals that there were 1,427 suspected cases of illegal drug manufacture or cultivation in 2019 and 2020 in the UK, equating to two police cases being opened every single day.
Nearly half (48%) of police investigations into the theft of electricity – where a gas or electricity meter has been tampered with so that energy usage is not correctly recorded – are suspected to relate to the cultivation or manufacture of illegal drugs.
Simon Blunden, Underwriting Product Manager for Covéa Insurance, says:
How to spot if your property is being used for drug cultivation
Warning signs that a property is being employed for illegal cannabis cultivation, or are intended for this purpose are numerous and can include:
- A tenant wishing to pay for several months’ rent in advance, in cash
- Sudden heightening in the security measures of the premises
- Requests made by tenants for you to not visit the premises.
- Evidence of the tampering of the electrical installation
- Windows shuttered, blacked out or otherwise obscured
- Dramatic increase in utility bills
- Indications of sub-letting
- Unusual number of visitors, particularly at less sociable hours
- Snow melting unusually quickly on the property’s roof
Take care when selecting your tenants – rigorous checks and inspections are key and usually a requirement!
In addition to significant physical damage and lost time, the clear up and repair costs in the aftermath of a cannabis farm can be considerable and involve serious loss of rent. As well as the financial cost, landlords could also face prosecution themselves. So, making sure you have the right tenants in your property is key.
Kevin Grealis Covéa Insurance’s Senior Technical Manager, Property Claims says:
In an effort to mitigate the ever-present risk of premises being taken over for illegal cannabis production, property owners should consider the following measures as recommended best practice:
- References should be obtained for all persons named on the tenancy agreement. These should come from an employer and a previous landlord (if applicable), or a Tenant Referencing Service. References should always be requested in writing and should be followed up to confirm their legitimacy.
- Avoid taking payment for deposits and advanced rent in cash, insisting that payment is made by cheque or bank transfer from an established and verified bank account.
- Specify in the lease that inspections of the premises are carried out following initial occupation and at least once every three months thereafter. Ensure you undertake full inspections and keep detailed records of your inspections.
Further helpful sources of information: