LEASE RESISTANCE: County officials consider restricting rental houses in new neighborhoods


HANCOCK COUNTY — As residential development continues to surge, county leaders are growing concerned with the possibility of companies buying up homes and turning them into rentals.

Officials are considering new rules to prevent the practice. But those in the building and rental home sectors suggest that would only create problems, not solve them.

The deliberation first surfaced last month as the Hancock County Area Plan Commission considered a late-stage approval of Fields at Sugar Creek, a neighborhood of more than 100 homes D.R. Horton wants to build near the southeast corner of U.S. 52 and South County Road 800W. Mike Dale, executive director of the plan commission, was advised to include a covenant that all homes must be owner-occupied and not leased.

“The county leadership is concerned about corporate entities buying up housing stock and thereby reducing the supply of available homeowner-occupied houses,” Dale said.

Bill Bolander, a member of the county plan commission and county council, is among that concerned leadership.

“Some of these corporations are going in and buying entire neighborhoods and then all of a sudden they turn into rentals, and I don’t think we want that to happen,” Bolander said.

Bill Spalding, a member of the plan commission and a county commissioner, agreed.

“What happens with a lot of the rental properties is transient people — and I don’t hold it against them for being transient — normally don’t take a vested interest in the community, and bring down the quality of the development overall,” he said.

Richard Henderson of Fishers-based Premier Land Company, which is working on Fields at Sugar Creek, emphasized the neighborhood is not a build-to-rent community. All homes will be sold as individual ownerships, not rental properties, he said. However, he objected to an all-out restriction on renting.

“There are potential issues that can arise where a homeowner needs to rent their house,” Henderson said, adding they may take a job out of state temporarily and might want to rent out their house while they’re gone.

Byron Holden, a plan commission member, agreed.

“To me it’s a little bit of an overreach,” he said of restricting renting.

Henderson also said Fields at Sugar Creek’s future homeowner association should be the one to make a decision on prohibiting leasing.

“Once the developer is done and the neighborhood is sold out and we don’t have rights anymore, the HOA and neighbors can change that,” he said.

Henderson and plan commission president Tom Nigh noted that banning renting could affect home financing. If a homeowner ends up losing a house and it goes to a bank, the bank may want to rent it. If it can’t, it may not make a loan to begin with.

Fields at Sugar Creek was ultimately too far along in the process for such a rule to be imposed unless the developer agreed, said Gregg Morelock, the plan commission’s lawyer. He added that if leaders want to curtail leasing in new neighborhoods, they’d need to amend the county’s subdivision control ordinance. Officials intend to discuss the matter further at November’s plan commission meeting.

Similar concerns in existing neighborhoods

The Havens, a neighborhood in Sugar Creek Township, does not have rules preventing homes from being rented. Scott Wooldridge, president of the community’s homeowner association, said he’s heard from residents about a couple homes being bought by a rental home company in the last few months.

“It’s a concern to them,” he said. “They just don’t want renters living next to them.”

There are other rental homes in the neighborhood, Wooldridge added, but they’re owned by individuals or a trust.

He said he understands concerns about a potential influx of rental homes in the area, flipping the market from a seller’s one to a buyer’s one. Wooldridge also noted corporate owners typically don’t attend HOA meetings, which could make it difficult to make or change any rules, as large majorities are often required to do so.

He also believes in companies’ rights to conduct business as well.

“I understand it from both sides,” he said.

Residents of The Havens are far from the only ones in central Indiana concerned about rental housing. The Indianapolis Business Journal reported this summer that at least 200 area homeowner associations have modified covenants in the past half decade to limit rentals.

Industry thoughts

David Howard, executive director of the National Rental Home Council in Washington, D.C., which represents owners of single-family rental residential properties, said the notion that renters don’t take as good of care of their properties is a stigma the industry has suffered from for years.

“As we all know, there are homes that people own and live in that are also, I’m sure, not kept up to community or neighborhood standards,” Howard said. “I think it’s unfair to say that because somebody’s renting a home, that they or their property owner’s not capable of keeping it on the same level from the property-management standpoint as other houses in the neighborhood.”

Of the five largest companies in the council’s membership, four have an A-plus rating with the Better Business Bureau, he added.

“The idea that a rental homeowner could not be concerned with properly maintaining property management really runs counter to the whole idea of rental home ownership,” he said. “As an owner of a rental property, it’s always in your best interest to make sure that home is maintained, make sure you’re investing in that home.”

Howard thinks Hancock County leaders’ hearts are likely in the right place as they ponder the change.

“I think a lot of these efforts might be motivated for perhaps the right reasons; home ownership is fantastic,” he said.

But at the same time, a lot of people want or need to rent, he continued, in large part due to rising home prices; those entering the workforce with student debt; and a lack of available housing. He added demand has been growing for single-family rentals, especially during the COVID-19 pandemic, because of the extra space a house provides for working and schooling from home.

“Which is another reason why a lot of these policies that limit or restrict the amount of rental housing probably will have unintended consequences, because when there’s so much demand for rental housing and not enough of it, government policies that limit the availability contribute to those supply constraints, which already are at pretty severe levels,” Howard said.

The Builders Association of Greater Indianapolis also feels there are benefits to single-family rental housing. Kate Collins, director of government affairs for the organization, noted people are getting married later and that young families often start by renting before having children and getting involved in a local school system.

“I think it’s important for any community to have the right balance,” Collins said. “It’s important for new households to put down their roots to help grow a community so it can really thrive; it’s important to have the full spectrum of housing available at all different price points.”

Counterpart comparisons

The municipalities of Greenfield, Fortville and McCordsville don’t have rules restricting rental homes.

Joan Fitzwater, Greenfield’s planning director, estimates more than 20% of the city’s housing stock is rental.

“I’m not sure that I really care who the residents are as long as the property is kept up and maintained,” she said.

She doesn’t think there have been many issues with any of the corporately owned rentals.

“They’re usually pretty quick to respond,” she added.

Rental home firms have been popping up on property transfers in McCordsville, said Ryan Crum, assistant town manager-planning and development.

“We are seeing some corporations buying up lots in McCordsville; it’s certainly happening,” he said.

Imposing a limit on it is yet to be discussed with the town council, however.

“I think it’s something to monitor,” he said. “As with everything in life, there needs to be a good balance. I think the key is monitoring it and if there seems to be a good balance, there’s probably nothing to do, but if at some point in time we need to address it because of an imbalance, we may need to look at something.”

Housing is also heavy on leaders’ minds in New Palestine, which has gained about 200 new homes this year with no sign of slowing. Town manager Jim Robinson doesn’t think the town has rules that would prevent any of them from being rented, but doesn’t think it’s necessarily a bad idea, especially if the market turns.

“I think it’s a good rule to follow because it protects a lot of buyers in a down market,” he said.


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