2.02.26

The Hidden Risks of Illegal Cannabis Cultivation for Residential Landlords

Landlords face a growing risk from the misuse of their properties for illegal cannabis cultivation. Beyond legal ramifications, properties used as hidden grow-ops are exposed to significant damage, safety hazards, and potential financial loss due to unpaid rent or voided insurance claims.

Residential properties are not designed to accommodate industrial-scale cannabis cultivation. Modifications often required to facilitate these operations can create a range of hazards, including:

• Fire risks from overloaded electrical systems
• Mould growth caused by excessive humidity
• Structural damage from unauthorised building works
• Water damage and rot due to irrigation leaks
• Chemical exposure from fertilisers and pesticides
• Explosion risks linked to hash oil or solvent processing

Illicit cannabis operators rarely use professional tradespeople, which can result in poorly executed electrical work, DIY plumbing, and structural alterations. These create fire, safety, and structural hazards that may also affect neighbouring properties.

Although many illegal grow-ops have moved away from high-intensity discharge (HID) lamps, cannabis cultivation still demands substantial electricity. In some cases, criminals illegally tap into the grid, further increasing the risk of fire or property damage. With many operations automated or remotely controlled, fires or other incidents may go unnoticed, compounding the potential for harm.

Implication for Property Insurance

From an insurance perspective, properties used for illicit cultivation present serious challenges:

1. Void or denied claims

Standard homeowner or landlord policies are not designed to cover illegal agricultural activity. Damage caused by an illegal grow-op – including fire, water, or structural damage – may result in a claim being denied.

2. Landlord liability

Even if unaware of cultivation, landlords can face liability for injuries or damages unless reasonable steps have been taken to inspect and manage the property

3. Policy cancellations or premium increases

Failure to report or prevent illegal cultivation can lead insurers to apply exclusions, increase premiums, or cancel policies altogether.

Best Practices for Landlords and Property Managers

To mitigate the risks of illegal cultivation, landlords should adopt proactive measures, including:

• Conducting regular property inspections in line with tenancy agreements and legal access rights
• Ensuring appropriate insurance is in place, with cover for risks associated with illegal drug cultivation where available
• Vigilant tenant screening, including identity verification, credit and right-to-rent checks, employment and landlord references, and accompanied viewings
• Maintaining detailed inventories and documenting the condition of the property at the start of each tenancy

Landlords should also be alert to warning signs of illegal activity, such as tenants insisting on cash payments or avoiding normal access arrangements. Under no circumstances should landlords attempt to enter a property unlawfully; suspicious activity should be reported promptly to the police and the insurer.

Cox Mahon’s Perspective

Residential cannabis farms present complex and evolving risks that standard home insurance policies are not designed to address. At Cox Mahon, we emphasise the importance of proactive risk management for landlords and property managers.

We recommend:

• Comprehensive tenant vetting, including phone screening, accompanied viewings, right-to-rent and credit checks, and employment and landlord references
• Preparation of clear and detailed property inventories at the outset of each tenancy
• Prompt reporting of any suspicious activity to insurers and authorities

While no measures can entirely eliminate the risk of property misuse, these steps help reduce exposure to illegal cultivation and protect landlords’ insurance coverage. Ultimately, the responsibility for monitoring and managing the property rests with the landlord and managing agent, in line with the terms of the management agreement.

Information provided by  Harrison Law, (Cert CII) Head of Commercial & Private Clients, Cox Mahon Ltd.