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HOAs Making It Harder To Rent Homes In Indiana

Since the recession hit more foreclosed homes in Indiana have become rental properties, causing neighborhoods to pass more rental restrictions.

for rent sign

Photo: flickr (Charleston's TheDigitel)

Rental restrictions in Indiana neighborhoods have increased the last few years.

More home owners associations are placing stricter rules on when and how people can rent out homes in Indiana and the trend is likely caused by an increase in the number of rental homes in the state.

Since the recession, real estate companies in other states have been buying a lot of foreclosed properties in Indiana. And they often use them strictly as rental properties.

Home owner associations say an influx of rental homes often means more tenants who don’t keep up the home, the yard and respect rules of the neighborhood. And that negatively affects the neighborhood’s property values.

Scott Tanner is the  owner of Tanner Law Group in Indianapolis and exclusively serves homeowner’s associations that want to draft rental restrictions such as banning renting if a property’s deed ever changes hands and not allowing renting the first five years someone owns a property.

“Up until about two years ago, I had some associations that wanted to put rental restrictions on homes and it was rather difficult to get passed, because it takes such a large percentage of the community to pass an amendment to a set of covenants that restrict the neighborhood.”

But Bloomington realtor Lisa Funkhouser says there’s also another reasons for the uptick in rental restrictions.

“Banks have regulations on how many owner-occupied properties can be in a certain designated areas in order to make loans. So that’s the big driving force behind it.”

In other words, the number of rental homes in a neighborhood can affect whether banks are willing to give loans to potential buyers.

Claire McInerny

Claire McInerny is an education reporter for StateImpact Indiana. She comes to WFIU/WTIU from KCUR in Kansas City. She graduated with a journalism degree from the University of Kansas where she discovered her passion for public media and the stories it tells. You can follow her on Twitter @ClaireMcInerny.

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