More landlords are working together with tenants to commit fraud while running illegal cannabis farms, according to one property lawyer.

Investigators at DWF Law have seen an increase in these farms along with growers and policyholders working together, as opposed to the policyholder being in the dark about what their tenants are up to.

Writing in Insurance Times, partner Paul Holmes says: “The policyholder will supposedly bring in a tenant, leave that tenant to it and then be amazed in 12 months’ time when the property is busted for being a cannabis farm.

"Whereas really the policyholder has teamed up with the gang. They’ve been profiting the whole way through and then at the end - when the farm is finally busted - the policyholder will put in a malicious damage claim to the insurer under that commercial or domestic household policy.”

Opportunities

There are plenty of claims opportunities after a cannabis farm has been discovered, such as escape of water claims due to the irrigation systems that are installed. If these claims are successful, the policyholder - if they own the building - can get the property renovated using their claim payout, ready to put back on the letting market and start the cycle again. “This is a massive problem at the moment,” Holmes says.

He partly attributes the uptick in property fraud to the introduction of the official injury claim portal in May 2021. With lower compensation amounts defined in the injury tariff table, personal injury motor fraud became less attractive and lucrative for many scammers, meaning that groups of fraudsters turned their focus to other potential areas of insurance fraud. Meanwhile, fraud detection methods have grown in sophistication and many insurers are now simply better at spotting fraud, Holmes adds.