Rent is often determined based on inflation and the condition of the property. (Lauren Chapman / IPB News)
Indiana is one of the few states in the country with no state-wide rent control laws. Landlords have the freedom to increase rent by any amount, but are not permitted to raise rent for retaliatory or discriminatory reasons, or during the middle of a lease’s term unless specifically allowed by a contract.
State Sen. Fady Qaddoura, (D-Indianapolis), said the lack of laws in place could be due to organizations opposing legislation counter to their financial interests. He also thinks the General Assembly has a limited understanding of the issue.
“It has been reported publicly that some legislators are landlords themselves, and they fear that such regulations would impact them personally or their own communities,” Qaddoura said. “While rent control is one idea, it might not be very popular idea in the Indiana General Assembly because some may argue that government should not be interfering with invisible hand and regulating market forces.”
Qaddoura said the lack of rent control laws affects limited-income families the most. Only homeowners have multiple tax credits, deductions and exemptions; Qaddoura thinks as rent increases, renters should have more than the singular tax deduction that has remained the same for the last 30 years. In addition, rent and demand for housing have increased since the pandemic.
“There are other factors that are driving rental prices in Indiana, including out of state investors who are buying homes and properties in Indiana,” Qaddoura said. “They are creating a short supply of affordable homes in our state.”
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Doug McCoy, founder and CEO of Grant Properties in Bloomington, said he sets rent each year based on inflation; this allows him to pay maintenance and utility costs that increase with inflation as well. McCoy said rent control laws would push things in a negative direction and make it difficult for his employees to afford the cost of living.
“Imagine whatever product you're trying to sell, instead of having a free market, someone steps in and says ‘Well, we're only going to allow you to sell this product for this certain amount,’” McCoy said. “That's very difficult because on the other side of the ledger, you have to pay employees, you have to pay for upkeep, you have to give raises, you have to do all the things to operate a business.”
McCoy said he is less likely to raise rent as much if someone is renewing their lease. If someone is renting with Grant Properties for the first time, he increases rent with inflation to keep pace with rising costs and not fall behind. Rents have been increasing at around three to four percent annually in the last few years, he said.
McCoy also cited zoning constraints; in a crowded college town like Bloomington, it is harder to develop and subdivide land.
“You can go up to Indianapolis, Carmel, Fishers, Noblesville, Zionsville, Westfield, I mean, just unbelievable growth, and usually always compared to Bloomington, lower housing prices, because it's much more friendly to new development,” McCoy said. “[It’s] very competitive for developers.”
Qaddoura said since the state has few rent control laws, there is a lack of enforcement and penalties. Tenants may not be able to leave if things are not working out because other affordable units may not be available or they cannot afford to quit their job and find another one.
“The lack of presence of these laws can attract these investors who are trying to make a quick buck and move on,” Qaddoura said. “I heard from tenants from across the state of Indiana — corner to corner from many zip codes — with their bad experiences with landlords that are negligent, abusive, and are unwilling to be responsive to their needs.”
Qaddoura pointed to one landlord company in Indianapolis, the JPC Affordable Housing Foundation. JPC is a nonprofit organization based in New Jersey. At the Lakeside Point Apartment Complex in Indianapolis, investigators found JPC did not address the lack of running water and presence of mold. JPC was later banned from operating in Indiana.
McCoy said he tries to minimize evictions as much as possible; instead, he tries to communicate with the tenants to work something out. Grant Properties rents mainly to college students; if the student still cannot pay their rent after some time, he usually lets them go at the end of a semester, a natural transition point.
“It's the worst when someone just tries to hide, but if everybody's communicating and trying to work through it, a lot of times you're like, OK, well let's come up with a plan,” McCoy said. “You lost your job, and now you're getting another one, you're a little behind. So, what's it look like for you going forward? Can you pay this much? When do you think you can get caught up?”
McCoy said his staff aims to address any tenant-reported issue within 24 hours. If it is a weekend or the issue is not an emergency, it can take up to a few days to address the issue. It is also harder to fix things when students come back to school.
“It’s like musical chairs; you’re just inundated with people moving in and out,” McCoy said. “[It’s] sometimes hard for people to understand how much we're dealing with… but we just keep reassuring them, ‘Look, we're getting to you as fast as we can.’”
Qaddoura proposed Senate Bill 202 in 2023, but it did not pass. The bill would have created an escrow model; if landlords did not address any living condition issues, such as structural damage or growing mold, within 30 days, then the tenant could go to a local court and pay rent to a third party. The bill also specifically defined safe living conditions and would have required that out-of-state investors maintain headquarters in Indiana for at least five years.
Qaddoura said he will be reintroducing SB 202 at the current legislative session, but as a second author instead. Republican Sen. Greg Walker (Columbus) will be the primary author.
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“A primary Republican author increases the chances of the bill receiving a hearing in the Republican caucus,” Qaddoura said. “Sometimes being part of the minority, it's more of an uphill battle to even get a hearing on some of these bills. I hope that through the bipartisan partnership, it will get us better results this upcoming session.”
Qaddoura said he would like to see more work done at the state level, such as creating an emergency rental fund to deal with evictions and homelessness. He also thinks the General Assembly needs to invest hundreds of millions of dollars to create partnerships with locals to address the affordable housing crisis.
“My legislation will not impact responsible landlords, responsible landlords… they shouldn't be concerned about legislation because they're already doing their jobs,” Qaddoura said.
John Zody, director of the housing and neighborhood development department at the City of Bloomington, said there are 29,000 rental units within city limits. Under Title 16 of the Bloomington Municipal Code, every rental unit should have minimum maintenance standards, basic equipment and facilities and safe living conditions. The code also requires the city to inspect rental properties on a permit basis every three to five years.
“We administer housing and community development funding that comes both from the City of Bloomington and the federal government, block grant dollars,” Zody said. “We have a housing development fund, we have down payment assistance programs.”
Zody said the city tries to influence the rental market to add more affordable housing units through the Unified Development Ordinance. As part of the ordinance, the affordable housing incentive requires that a company make at least 15 percent of its units permanently affordable to people making up to 120 percent of the area median income. A company must also contribute to the sustainable development incentive; they must build the apartment to include things such as solar panels, energy efficiency and covered parking.
If developers do not want to agree to the affordable housing incentive and sustainable development incentive, they can contribute to the Bloomington Housing Development Fund instead. The fund raises money to increase the number of affordable housing units in the city. It also provides loans and grants for the development of affordable housing.
“Let's say a private developer comes in and they say 'We want to build a building,' Zody said. "And we say 'Great, how about some affordable rental housing as well as your market rate, the normal market price; we have incentives through our local government here that we can offer. If you're willing to put some affordable units in there, we'll give you an extra floor; it increases the volume of units.'”
Zody said Bloomington is among one of the top five most expensive rental markets in the state. Depending on the area, average rent is between $1,200 and $1,600 a month. To combat increasing prices, the city is hoping to increase production of units and push for grant and loan programs to make affordable units more available.
“If a city owns land, we are sort of in control of the situation,” Zody said. “Who we sell it to, what we want there.”
Zody said the city can work with developers to make the apartments more affordable in exchange for potentially lowering land cost. The city may subsidize the cost of land with public tax dollars.
“Just because you have all these new apartments going up doesn't mean that everyone has a place that they can afford to live,” Zody said. “There's always a challenge to look what the gaps are and who's missing out on that affordability… the preservation of affordable housing is really important.”
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Matt Rayburn, chief real estate development officer for the Indiana Housing and Community Development Authority, said people can get non-time-limited renter assistance through their Housing Choice Voucher or shorter-term help through their emergency rental assistance programs. It reduces the amount of rent they need to pay themselves.
“We also work on other programs like energy assistance and water assistance to help qualify low-income families be able to pay for their energy, especially heat in the winter,” Rayburn said.
Rayburn said during the pandemic, construction costs increased by 20 to 30 percent, but have since stabilized. Interest rates on loans have risen seven to eight percent. An average sized project produces 40 to 50 units.
“The challenge is the same amount of dollars just isn’t going as far,” Rayburn said. “The amount of resources we have is pretty stagnant…we’re creating less units per year even though we’re funding the same number of total developments.”
