Can Fishers Put a Cap on Rental Homes in Subdivisions?

The city of Fishers, Indiana is currently attempting to restrict how many homes in a subdivision can be rental units owned by a landlord. The proposed city ordinance would cap the number of rental homes in each Fishers subdivision to 10% of the homes in the subdivision. Current landlords will be grandfathered in if the ordinance does pass, meaning that landlords renting out homes in subdivisions above the threshold will still be able to keep renting them, but won’t be able to acquire new homes in the subdivision for the purpose of renting them out. In addition, the ordinance will require any landlord renting out a home to get a permit from the city. This permit will be permanent, and permits will not be given to landlords attempting to buy units in subdivisions that are already above the 10% threshold. If the ordinance passes, it will be enacted and go into effect on January 1, 2026.

The city’s goal is to limit corporations and investors from buying up too many homes in Fishers. Proponents of the ordinance argue that these entities outbid families that want to buy a house to live and gain equity in. The city data shows 2,522 homes in Fishers being rental units.

This is a novel law here in Indiana and is sure to face legal challenges. While there is no Indiana statute expressly prohibiting the ordinance, there is not one that expressly grants local bodies of government the power to cap rental homes in subdivisions. The Indiana home-rule statute (Indiana Code 36-1-3) will certainly be used in analyzing the legality of Fishers’ ordinance. This statute outlines the powers of local bodies of government in Indiana. It specifically prohibits local government bodies from enacting ordinances regarding many issues but capping rental homes in a subdivision is not one it prohibits. In addition, the statute grants local government bodies the powers they need to run their affairs. The statute also creates a presumption that the local governing body has the authority to enact whatever power it is attempting to exercise. This does not mean that Fishers will have the authority to enact its cap on rental units, but that it is presumed that Fishers has this power, and the presumption must be overcome by a challenger of the law in order for a court to find that Fishers cannot enact it. The most likely potential challengers of the law will be corporations or investors that want to buy and rent out more homes in Fishers, as they will be the groups most negatively impacted by the ordinance. Whether it will be legal or not is yet to be seen, but, if allowed, this ordinance will likely start spreading to other Indiana communities.

If you have any questions about the Fishers ordinance and if it will affect you, please contact McNeelyLaw LLP by calling (317)825-5110.

Disclaimer: This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.