Two of Central Indiana’s most prominent cities are now making it clear: they’re drawing a line on rental saturation. On April 21, 2025, the Fishers City Council unanimously passed Ordinance 022425A, establishing a 10% cap on single-family rentals within each subdivision.
Just one day later, the City of Carmel introduced a nearly identical ordinance, signaling that the suburban rental landscape in Hamilton County is shifting fast—and dramatically.
For investors in Central Indiana, this is no longer a hypothetical concern. These ordinances are real, enforceable, and potentially disruptive. Understanding the specifics—and how to pivot—has never been more important.
Fishers, Indiana: 10% Rental Cap is Official Law
Fishers’ new ordinance marks one of the most aggressive rental restrictions in the region. Ordinance 022425A sets a hard cap: no more than 10% of single-family homes in any given subdivision can be non-owner-occupied.
Key Details of the Ordinance:
Effective Date: The law takes effect January 1, 2026, giving current owners and HOAs time to prepare.
Property Registration: All single-family rentals must be registered with the City of Fishers, including owner and property manager contact details.
Grandfather Clause: Homes that were rented before the cap goes into effect are permitted to continue as rentals, even if their neighborhood exceeds the 10% limit. However, any future leasing or transfer must comply with the ordinance.
Enforcement & Penalties:
Failure to register a rental property may result in a $250 fine per violation.
Leasing a property in violation of the 10% cap may trigger fines up to $7,500, making compliance not just important—but essential.
Fishers city officials cite long-standing concerns over rising investor ownership, especially among institutional buyers, as the driving force behind the ordinance. According to the city, too many rentals can lead to declining property maintenance, reduced neighborhood engagement, and limited homeownership opportunities for residents.
Carmel, Indiana: Similar Legislation Introduced
On April 22, 2025, just one day after Fishers passed its ordinance, the Carmel City Council introduced its own 10% cap on single-family rentals in residential subdivisions.
While Carmel’s ordinance has not yet passed, the city is already drawing from the Fishers playbook—but with some notable differences. Carmel’s proposal includes several built-in exemptions to make the rule more flexible for individual owners:
Proposed Exemptions Include:
The property has been listed for sale for at least six months with no buyer.
The owner is relocating for work and unable to sell the home.
The property is being rented to family members or legal dependents.
The owner is an active-duty military member who has been deployed.
Selling the home would result in undue financial burden for the owner.
While the ordinance has not yet been voted on, early discussion indicates support among city officials. If passed, enforcement would likely follow a timeline similar to Fishers’—giving owners a grace period before penalties are applied.
What This Means for Indianapolis Investors
These changes mark a significant evolution in housing policy across Central Indiana’s suburban core. For years, Fishers and Carmel have been attractive markets for investors due to strong appreciation, high rental demand, and desirable school districts. But with these new caps, investors will face critical new challenges:
Inventory Restrictions: In capped subdivisions, once the 10% threshold is hit, no new investor purchases can be converted into rentals. This could severely limit inventory and raise acquisition costs in already-competitive areas.
Reduced Flexibility: Grandfathered properties may retain their rental status, but transferring ownership or continuing to lease after long vacancies may trigger compliance issues.
More Bureaucracy: Investors will need to be diligent about registration, ongoing compliance, and neighborhood-specific restrictions. One mistake—like renting in a subdivision that’s already over the limit—can result in thousands of dollars in fines.
Shifting Investment Strategies: Many investors may now need to explore secondary markets—such as Anderson, Greenfield, Muncie, or Kokomo—where investor activity remains encouraged and unrestricted.
The Bigger Picture
These ordinances are part of a larger national trend aimed at curbing investor ownership in residential communities. While the intention is to stabilize homeownership rates, the effect is a more restricted landscape for rental housing—especially for small- to mid-sized investors.
For those managing portfolios in Indiana, these two ordinances are likely just the beginning. As Fishers and Carmel move forward, it’s entirely possible that other municipalities across Hamilton and Marion Counties will adopt similar policies.
Final Thoughts
The passing of Ordinance 022425A in Fishers and the introduction of similar legislation in Carmel represent a clear shift in how Central Indiana cities are approaching rental housing. Whether you’re actively growing a portfolio or holding onto a handful of properties, understanding and adapting to these new rules will be key to protecting your investments—and uncovering new opportunities.
If you’ve relied on Fishers or Carmel as cornerstones of your investment strategy, now may be the time to diversify, seek markets with more favorable conditions, and ensure that every property in your portfolio is fully compliant.
