The New Growth Sector
The credit crunch has led to an unprecedented growth in renting properties for the purposes of growing a very specialised crop. This crop used to be grown in exotic locations overseas, but now this industry has come to the UK in a big way, when you look at the cash flow of this industry, it is easy to see why this sector has exploded. The cash rich nature of this crop means a lot of energy is being put into its continued growth in the UK. The crop is known as cannabis or Marijuana and a variety of other street names.
Properties have been taken from landlords and have been passed to apparently very well to do tenants having passed referencing from professional agencies such has Paragon who specialise in only referencing.
A few months back a gentleman who was also an agent had rented his property for £1,600 pm to a respectable Chinese couple who were both Chartered Accountants, earning a combined salary of £94,000. The tenants had been referenced by Paragon and passed. A month’s deposit and one month’s rent was taken upfront as per usual practise.
Two months after the tenants moved in the landlord receives a call from a policeman telling him to come to his property immediately.
His beautiful four bedroomed semi detached property in Harrow had been turned into a cannabis factory. Decked out with infra red lamps, ventilators and pots of marijuana.
The property had severe water damage, ceilings and walls had been knocked through to allow ventilation, wiring had been ripped out. In order to reduce their overheads an electr ic feed had been taken from a nearby lamp post, as the electricity consumption is huge. After all business is not about turnover but reducing your costs too.
The damage has run into the tens of thousands. The damage on the property is not covered by buildings insurance. And one should be very careful to ensure they have complied with the small print to ensure the damage will be covered, there are some rent warrantee policies to cover this type of damage. Below is an actual picture of one of the rooms.
￼The remaining three rooms had cannabis worth £75,000. With a four week crop cycle, the remaining four rooms had already been harvested. With figures like these it is easy to see this is a strong cash flow enterprise, each room will generate £25,000 every 4 weeks over the year this equates to a turnover of £2.1m on one property. It is easy to see why this literally is a mushrooming business. The extent of this problem has grown, so many Police Stations have set up units to deal specifically with this problem.
Only this week on Monday early morning I get a call from a longstanding client who’s based in Epsom and owns a property in Kingsbury. The property is a four bedroom house in the prime areas of Kingsbury, it had been rented for 9 years without any issues and late payment of rent. The rental being received was £1300pm. The property became empty in July of this year, naturally after 9 years with the same tenants the property had become a bit dated.
To re-rent the property he contacted a firm who advertised themselves on Sunrise radio. The agent went around to the property and mentioned something about the need for refurbishment and perhaps applying for a grant to help refurbish it in exchange for giving it back to the council for a 5 year period. Two weeks later the agent stated the property must be vacant for a 6 month period to be eligible e for this grant. He suggested he had someone to rent the property for 6 months in its current state. So our client thought better to have half a chapatti than none, and therefore agreed to go ahead with the rental.
The agent of course took all their commission upfront and after the so called cleaning expenses the client was left with £259 in the first month and then £750 the following month as the agent was kind enough to split his fees over a 2 month period.
Apart from this he got nothing but false promises from the agent. The property was rented on a let only basis, and a reference was provided by the agent to state they have worked with this tenant before and he pays his rent with no other ID documents regarding the tenant.
The agent was never given authority to sign for the landlord but sign he did.
Funnily enough the agent simply returned the key to the landlord on the Tuesday and washed his hands from the property and simply said there was something strange going on in the property. The landlord went to visit the property on a Sunday as he has a very busy week running a dry cleaning agent during the week. What he saw shocked him on arrival to the property, he discovered the property was being used to grow drugs. The kitchen had stale food rotting away in there, there were watering and heating pipes all around the property.
The damage has been estimated to be in the region of £20,000 to £25,000, an appointment was made with the police for the following day.
Below are Signs to look out for:
- Windows blacked out with black plastic or heavy fabric
- Electric wiring which has been tampered with
- Powerful lights on all the time.
- Large tubes like washing machine tubes can be seen protruding out the window.
- Bags of vegetation
- Reflective materials, bulbs
If you spot these signs it is always advisable you contact the police in the first instance.
Sow & Reap
A Property Investment &Financing company.