Officers obtained a warrant to enter the two-bed property in Riverside Close in January and carried out a search.
Phil Howes, prosecuting, said that 98 wraps of crack cocaine and 12 wraps of heroin were found in a shoulder bag belonging to teenager Genial Vansi who was staying with the tenant of the flat, Daniel Terry.
Mr Howes said: “This was a street dealing operation of Vansi who had come over from Birmingham and was staying at the flat with Terry.
“It was a beneficial arrangement for both of them. It gave Vansi a base and it gave Terry the availability of drugs as recompense.
“There were scales in the property and the usual indicators of drug dealing. There was also a significant amount of cash which came to £875.
“When Vansi was interviewed he admitted he had been selling drugs in Sleaford during the three week period leading up to his arrest.”
Damian Sabino, for Vansi, said the teenager was of previous good character and made admissions when he was interviewed by police.
He said that Vansi became involved in selling drugs after running up a debt for cannabis he was using.
Michael Cranmer-Brown, for Terry, was a long-standing addict who was homeless for a number of years before he obtained his flat.
He said that Terry was working to kick his habit and welcomed the structured support network that will be available to him if he is given a community order.
Vansi, 18, who was living at Terry’s flat at the time, admitted two charges of supplying drugs between January 1 and 22 January this year and two charges of possession of drugs with intent to supply.
He was given a two year custodial sentence suspended for two years with a rehabilitation activity requirement of up to 20 days and a three month electronically monitored night-time curfew.
Terry, 42, of Riverside Close, Sleaford, admitted two charges of permitting premises to be used for the supply of drugs. He was given a two year community order with a drug rehabilitation requirement for nine months and a rehabilitation activity requirement of up to 25 days.