The growing threat of cannabis cultivation for landlords - Total Landlord Insurance

May 3, 2024
Total Landlord Insurance
The growing threat of cannabis cultivation for landlords - Total Landlord Insurance

Since the Covid pandemic, the illegal cultivation of cannabis has been a growing problem for buy to let property owners. The police are increasingly finding smaller scale cannabis farms in residential private rented properties, and insurers have also observed a noticeable increase in claims for damage to properties that are knowingly converted into cannabis farms.

The Met Police found more than 1,000 cannabis farms across the capital between December 2015 and December 2021, and nearly half of these were found when London was in lockdown.

In response to this rise, June 2023 saw the largest ever crack-down on cannabis farms in the UK, with police forces from across Britain taking part in ‘Operation Millie’. In just one month they raided more than 1,000 cannabis farms, with plants worth £130m seized and some 1,000 suspects arrested.

Until recently, cannabis cultivation was generally large scale, often taking place in industrial units, remote warehouses and disused farm buildings. Now, the police are increasingly finding cannabis farms in private rented properties and empty residential homes, many of which they describe as ‘death traps’. Police say the buildings can become dangerous as a result of fire risks, unlawful abstraction of electricity, fumes and water damage.

Statistics show that around 90% of the cannabis used in the UK is supplied from farms operating from rented homes and that more than a million plants with a street value of £210 million are seized by the police each year.  Rental homes are particularly attractive to growers as there is no paper-trail – the properties are not connected to the gangs running the operations. Renting out several properties also helps criminals spread the risk should they be caught.

The threat of cannabis farms on landlords and the wider community

Finding a cannabis farm in your rental property is one of the worst things that can happen to you as a landlord. While cannabis-related crime is often thought to be low level, the police frequently find that cannabis production is just one aspect of a criminal operation and that offenders may be complicit in other illegal activity involving criminal gangs, human trafficking, money laundering, exploitation and violence.

A cannabis farm can render your property uninhabitable and it will become a crime scene, preventing you from re-letting it or carrying out repairs. You may even find yourself implicated if you have not taken the necessary precautions, putting your reputation at risk.

Cannabis farms pose a real threat to landlords today. If their property is turned into a cannabis farm, not only are they at risk of unwittingly becoming involved in a police investigation, but cannabis farms cause enormous damage to a property.

– Melissa Choules, Senior Claims Handler at Total Landlord

At Total Landlord, we have seen a rise in cannabis farms. In particular, those that cause major fires within properties due to the rewiring of electrics and overloading of sockets from heat lamps. Between January 2019 and December 2023, 35 cannabis factory claims were reported to Total Landlord.

Damage caused by cannabis farms can be extensive and very expensive to rectify, with an average claim amount of £5,417. With malicious damage claims, there are limits imposed on our Premier policy of £25,000 for buildings, £5,000 for contents and 90 days loss of rent. The highest claim paid out was for £30,850 which included 90 days loss of rent. In this case, the neighbours had informed the landlord about alterations to the roof of the property. But when he went to investigate, the landlord was refused entry, so he called the police, who broke into the premises and found a cannabis factory. There was extensive damage to the property including holes throughout, vents installed and rewired electrics.

Another recent cannabis farm claim we dealt with was for damage caused by a fire which started due to the tenant rewiring the electrics. The stairs and ground floor ceilings all collapsed, and the entire property was damaged by smoke. We paid out nearly £25,000 for damage to buildings, as well as another £1,000 for loss of rent.”

– Melissa Choules, Senior Claims Handler at Total Landlord

Police warn that those tampering with energy meters risk electrocution, severe burns and increase the risk of fire due to exposed wires and connections that can easily become overheated. Worryingly, electricity theft – which involves tampering with or bypassing an electricity meter - reached record levels in 2023, with cannabis factories largely blamed for this rise. This is a concern as it can leave live wires exposed and will often involve bypassing fuse boxes, increasing the risk of appliances overheating or catching fire and death. People living in properties where there might be a theft of electricity are at a much higher risk.

The cultivation of cannabis can also result in mould and water leakage from hydroponics and irrigation systems, as well as damage caused by knocking through walls for ventilation and installing fortifications to stop easy access.

With rented homes increasingly being turned into potential death traps, illegal cannabis farms pose a huge threat not only to landlords, but also to the safety of people living in neighbouring properties. Nobody wants to live next door to a cannabis farm, yet towns and cities across the country are now blighted by criminals running cannabis factories from residential, often rented, properties. So, it is important that landlords can recognise the warning signs and know how to protect themselves and their neighbours against the risk of unwittingly becoming a victim of this trend.

What should landlords be looking out for, and what steps can they take to prevent cannabis growers gaining access to their property?

Warning signs that your tenant may have turned your property into a cannabis farm

Landlords need to know the tell-tale signs that their rental property could have been turned into a cannabis farm. Here are the key indicators to look out for:

  1. Neighbours may report unusual tenant behaviour – for example lots of activity when tenants first move in, a large number of visitors at all hours of day and night, paranoid or antisocial behaviour and even tents in the garden (as the property is too humid to sleep in)
  2. Tenants seeking to deter landlords from visiting the property or asking too many questions may offer to pay rent upfront, hand over large deposits, or make cash payments
  3. A major increase in electricity consumption can be a sign of cannabis cultivation, which requires large amounts of heat, light and humidity
  4. There are also a number of physical indicators that landlords should look out for, some of which can be observed from outside the property:
  • Excessive fortification of the property to prevent easy access
  • Silver duct tape around the windows, which may also be blacked out
  • Humidity in the property which can be seen in condensation, steamed up windows, peeling wallpaper and mildewed walls
  • A sweet, sickly pungent smell emanating from the property, which growers sometimes attempt to conceal with the excessive use of air freshener
  • Powerful lights (typically 600W) that are on both day and night
  • Extra ventilation equipment
  • Electrical wiring that has been tampered with
  • Paraphernalia that growers use to cultivate cannabis, stored either inside or outside the property, including reflective materials, bulbs, soil, fertiliser, rubber tubing, bubble bags and self-seal bags
  • Snow melting unusually quickly on the roof in winter and birds gathering on the roof, as it is warmer than others in the street
  • Whirring noise from fans

How can landlords reduce the risk of their property being turned into a cannabis farm?

Fortunately, there are steps you can take to minimise the chance of criminal operations in your rental property, largely involving making sure that you carry out regular visits and find the right tenant.

1. Carry out regular visits and inspections

Warning bells should ring if tenants routinely refuse you access to the property. It is important to conduct regular visits to your property and it’s advisable to do so within the first three months of the tenancy, ideally carrying out a first visit after one month. Follow the steps in our ultimate guide to inspecting your property, to make sure that you are providing adequate notice (at least 24 hours’) and following best practice. It can take as little as three months for cannabis to be raised to cultivation, so early inspection is vital.

If you communicate to tenants at the outset that you will be doing this, it may even deter a would-be cannabis grower from targeting your property.

If access is denied, check for the warning signs that don’t require you to enter the property, such as blacked out windows and lights on constantly. You should also keep records of repeated failed attempts to gain access to your property for an inspection without the tenant providing reasonable grounds. This may be needed if you end up pursuing possession proceedings.

For landlords who don’t live nearby, it’s a good idea to get to know the neighbours so that they can alert you to any usual behaviour.

2. Find the right tenant

Criminals are mainly using rental properties advertised through social media for their cannabis farms, hoping that in this way they can avoid formal checks. Taking on a reputable letting agency to find tenants is a lower risk option. Find out more about how to do this in our guide to choosing a letting agent.

Police have warned that criminals often use a ‘front couple’ to visit a property. After they have taken possession of the property, they will disappear without a trace, to be replaced by the criminals, who will then convert the property into a cannabis factory.

This is why it is really important to visit regularly and make sure that the person you rented to is actually the person occupying the property.

Even if the tenant is genuine, remember that many criminals will go to great lengths to portray themselves as an ideal tenant to find the perfect property.

So, even if you think you have found a great tenant, it is still important to carry out regular visits to the property.

3. Carry out thorough checks

Unfortunately, criminals are very good at coming up with false papers, so you need to make sure the referencing is really thorough. Bank statements, driving licences and utility bills all need to match up, too. It’s also a good idea to verity bank account details by receiving at least one payment from the account.

– Paul Shamplina, Chief Commercial Officer at Total Landlord and Founder of 
Landlord Action

It is vital that landlords and letting agents carry out thorough due diligence to confirm that tenants are who they say they are and that they are traceable.

Paul adds: “Landlords are understandably keen to get a tenant into their property, but it’s a false economy to skimp on referencing as the costs in terms of repairs and lost rent can run into hundreds of thousands of pounds.”

Paul advises landlords to be wary of prospective tenants who offer to pay several months’ rent in advance, want to keep utility bills in the landlord’s name and ask for complete privacy (no inspections).

Tips for making sure the tenant is genuine

  • Request photographic proof of identity from any potential tenants. Make sure that the identification provided is not fake and take a copy of it. For joint applications make sure you obtain ID from all applicants
  • Make sure all the documentation you gather relating to the tenant matches – look out for utility bills, bank accounts and ID such as a driving licence or passport that are in different names
  • Keep records of all documentation, including inspections, with dates, as this may be required by the police or your insurance company further down the line
  • Check the prospective tenant’s current address and rental history
  • Obtain the mobile phone number of prospective tenants and make sure it is genuine
  • Carry out credit checks and thorough referencing
  • Visit prospective tenants at their current address if possible

Do not feel rushed into agreeing a tenancy. Paul Shamplina advises: “Listen to your gut. Even if all the referencing stacks up, don’t be afraid to ask the tenant questions. If something doesn’t feel right, don’t sign on the dotted line.”

What to do if you suspect your tenant has turned your property into a cannabis farm

If you spot any of the warning signs and suspect that your tenant has set up a cannabis farm in your property, do not confront them. Contact your local police straight away. It’s important not to put yourself in any danger by trying to deal with the issue yourself.

Many local police forces are working closely with the private rented sector to tackle the problem of cannabis farms, calling on landlords and letting agents to join the fight against cannabis farms in rented properties by being extra vigilant.

Inspector Claire Hime of Lincolnshire police

We are asking owners of privately rented accommodation to carry out thorough checks of their properties on a regular basis. Landlords should also carry out official checks on any potential tenants.

If anyone notices any suspicious activity, they should contact us in the first instance. Landlords should carry out regular checks and look out for electrical wires that have been tampered with, blackened out windows and a sudden jump in electricity bills.

– Inspector Claire Hime, Lincolnshire police

Can a landlord evict a tenant for drug use or cannabis cultivation?

It’s important to remember that the tenant still has a right to quiet enjoyment of the property, so landlords cannot just rush in. However, since cultivating cannabis is a criminal act, the landlord should inform the police immediately and not take any action themselves or converse with the tenant at this stage, as this could jeopardise any future prosecution. In terms of terminating the tenancy agreement and evicting the tenant, a landlord has three options to take:

  1. Section 21 – Accelerated claim for possession. While this does not directly relate to drug cultivation or breach of contract, this route can be a sure way of obtaining possession, provided the landlord has complied with landlord and tenant law. To issue a Section 21, you must be compliant with tenancy deposit rules by protecting your tenant’s deposit in a scheme such as mydeposits. You must also make sure that you comply with any licensing requirements and, for ASTs granted on or after October 2015, you must have provided the tenant with a copy of a current energy performance certificate, a gas safety certificate and the latest copy of the government’s ‘How to rent’ checklist of prescribed information. Find out more about complying with landlord legislation in our guide, Legislation for landlords: Everything you need to know.
  1. Section 8 – Grounds 12, 13 and 14. A tenancy agreement will usually have a clause that a tenant must not use the property for any illegal or immoral purposes and if they are cultivating drugs, this clause would have been breached. A tenancy agreement will also usually contain a clause not to cause a nuisance to neighbours; cultivating drugs could cause a nuisance i.e. smells and increase of visitors to the property. The property could also be damaged, which would be a breach of obligation.
  1. Section 8 – Ground 7A. If a tenant is convicted of any drug related offences or any other offence, either in or in the locality of the property, this could also be a ground to evict the tenant.

Find out more about evicting your tenant in our guide, How to handle the eviction process and seek legal advice from a specialist in housing law such as Landlord Action.

Will my landlord insurance cover me if my tenant sets up a cannabis farm in my rental property?

It’s important to have landlord insurance in place in case any damage caused during the tenancy exceeds the amount of the tenancy deposit, which is quite likely in the case of a cannabis farm. This mydeposits case study explains how our deposit protection partner, mydeposits, approached a case involving damage due to cannabis and a lock change.

It’s vital to make sure you opt for landlord insurance that offers cover for malicious damage by tenants or guests. Check your policy to see whether there are any special conditions that you need to adhere to in order to claim. This could include carrying out adequate referencing checks and regular inspections.

Our claims team advise:

We often find that when validating claims for damage to a property caused by a cannabis farm, the listed occupying tenants, who have either been arrested or absconded from the address, have previously provided false references in order to secure tenancy and misrepresent their employment status, financial position or criminal record.

It’s therefore vital that landlords carry out validation checks prior to a lease being agreed with a tenant and understand the conditions of their insurance policy, otherwise a claim may be declined for breach of policy conditions.

Total Landlord’s award winning landlord insurance offering, Total Landlord Insurance, is recommended by the NRLA and specialises in providing comprehensive cover to meet the unique needs of landlords.

Our Premier policy offers protection against malicious damage by tenants and their guests, as well as cover for loss of rent resulting from the need to carry out repairs. But you will need to provide evidence that you did all you could to mitigate against the damage before we can pay out for a claim, For example, you will need to show that your tenant passed a full and robust reference check and that you carried out regular inspections on your property; claims won’t be paid out if landlords aren’t carrying out inspections or completing full referencing checks.

– Steve Barnes, Head of Broking at Total Landlord

As the landlord it is up to you to show that you have done all you can to reduce the risks and to make sure that you can provide evidence of the steps you’ve taken and that you meet your policy conditions.

If, despite your best efforts, you discover that your tenant has set up a cannabis farm in your property, Steve recommends seeking the advice of a professional eviction service such as Landlord Action.

Once it has been established that your tenant has been cultivating cannabis in your property, the first priority is to inform the police. Stay safe and avoid antagonising your tenant. You will then need to start eviction proceedings. It is really important that you get this right, so we recommend seeking the advice of a professional eviction service such as Landlord Action.

– Steve Barnes,
 Head of Broking at Total Landlord

Cannabis farms pose a real threat to landlords today. But by following our advice and acting swiftly in response to the discovery of a cannabis farm in your property, you will be doing all you can to minimise the financial, legal and reputational costs that this situation can cause.

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