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February 16, 2009

Insurer warns landlords over cannabis producing tenants

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by Gill Montia

Insurer warns landlords over cannabis producing tenants

Norwich Union has been warning landlords that they should vet tenants carefully and take time over inspecting properties, because of a rise in the use of let residential properties as cannabis farms.

Police figures show there were 5,497 seizures of cannabis plants in 2006/07 (up 34% since 2005) and according to the insurer, the cost of claims settled in 2007 rose to over £1 million.

Intensive cannabis production involves high-powered lamps and irrigation systems and can therefore result in all kinds of property damage, from holes in walls to serious fire damage.

NU property owners’ underwriting manager, Mike Colmans, warns that “with cannabis farming clearly on the rise, there is an increased risk for landlords and their properties”.

He adds that landlords may not be aware that their property has been damaged by tenants producing cannabis, however, their insurer may not settle a claim if the landlord hasn’t taken “reasonable precautions” in preventing such misuse.

Therefore, careful vetting is essential and short-term or sub-lets should be discouraged.

In addition, rent should be paid into a bank account, not accepted in cash.

Regular external and internal inspections are recommended as is employing a letting or managing agent to supervise a property.


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