New Zealand's illegal drug manufacturers seem to be moving into fancier digs - with implications for landlords and their insurers. Police in Hamilton have uncovered three clandestine methamphetamine labs in the past fortnight, all of them in modest rental properties.

The tenants have typically rented the homes for a few months before abandoning the illegal set-ups, leaving hundreds of thousands of dollars in damage behind. The toxic chemicals used in methamphetamine manufacturing can pollute floors, carpets and walls, and damage to electrical wiring is common.

The Insurance Council of New Zealand has warned property owners that typical landlord insurance will not necessarily cover damage caused by illegal activity.

"Insurers will be expecting landlords to keep a clear watch on their properties," CEO Chris Ryan told Sunrise Exchange News. "You've got a better chance of being looked after if you've taken steps to prevent a claim."

He says landlords should negotiate with tenants to have regular inspections of their properties.