"It's just a very challenging point where we're trying to roll out a program and it gets the legs taken out from underneath it," Carmel Mayor Sue Finkam told Current in Carmel in March, a week after the governor signed a state law banning the city's new cap on single-family rentals.
The program she was talking about is still in force today. It just has an end date now, and once that date passes, the question of whether homes in a Carmel subdivision can be rented out moves from City Hall to each homeowners association. Two homes with the same price, the same square footage and the same school address could have very different rental rules a little over a year from now. Those rules will be written in documents most buyers skim during the inspection period.
A City Rule With a Fixed End Date
The timeline is short, and it's worth having in front of you.
- June 2, 2025. The Carmel City Council unanimously approved a rental registry and a cap that limits single-family rentals to 10% of the homes in each neighborhood. An earlier version with a citywide cap was dropped. Current in Carmel reported that landlords would need to register and get a permit, with exemptions for certain family, military and hardship situations.
- March 12, 2026. Gov. Mike Braun signed House Enrolled Act 1210, a roughly 400-page bill that, among many other things, prohibits city rental caps like the ones Carmel and Fishers had adopted. The bill record is on the Indiana General Assembly site.
- January 1, 2028. The day Carmel loses the ability to enforce its cap. Until then, the city can keep enforcing it.
City Councilor Rich Taylor told IndyStar, in a report republished by Blue Water Healthy Living, that Carmel would most likely keep the ordinance running for as long as it legally can, hoping to show that it works. In practice, that means the rule in effect during a purchase this fall is not the rule that will be in effect for most of the years someone actually owns the home.
The Same Law Handed the Job to HOAs and Changed Who Votes
HEA 1210 took one tool away and gave another out. According to Current in Carmel's March coverage, the law lets homeowners associations set their own rental caps, and only residents who use their property in the HOA as a homestead may vote on the question.
The voting rule is where the real change is. Finkam said she supports that part of the law, because some HOAs with a large number of rental properties had previously struggled to reach a quorum on the issue. Owners who don't live in their homes no longer count toward that vote, so an association where owner-occupants care about the issue now has a clearer route to act.
The city has said outright that this is now the route. At a July 10, 2026 meeting covered by Citizen Portal, Taylor and city staff told neighborhood leaders that private HOA covenants, changes to voting rules and legal counsel are now the main tools for limiting rentals locally.
That leads to the thesis of this post. Carmel spent 2025 building one rental standard for every subdivision with at least 10 lots. Starting in 2028, the standard will be whatever each association has written down and voted for. Some will act before then, some won't, and from the street you can't tell which is which.
What the City Keeps After 2028
City officials expect rental registration to continue after the cap ends. Finkam told Current in Carmel she expects the city to keep rental registration because it lets officials reach a property owner quickly when something goes wrong. At the July 10 meeting, the city's Department of Community Services said it had a little more than 1,900 completed two-step registrations and that the registration program will continue even after cap enforcement ends.
The registry has a detail that matters at closing. According to the city's rental registration FAQ, registration covers single-family homes and townhomes rented for 30 days or longer, carries an annual $5 fee, and requires a new owner to re-register after a sale. A buyer purchasing a home that's currently rented doesn't automatically take over the seller's registration.
The same FAQ also explains how the cap works while it's still enforceable. Rentals that met the city's legacy-registration deadline could keep their permits even in neighborhoods already above 10%, and later applications in neighborhoods at or above 10% would be denied. The city also publishes a map showing which subdivisions are over the cap, according to IndyStar's March reporting.
Short-Term Rentals Went Through the Same Law
Rentals of fewer than 30 days took a separate path to a similar outcome. Before HEA 1210, Carmel required Board of Zoning Appeals approval for short-term rentals and treated them as a bed-and-breakfast use under its 2017 Unified Development Ordinance. Current in Carmel reported that the law retroactively changed the definition of bed-and-breakfast, which effectively removed the city's basis for enforcing those restrictions. Finkam said the city would be limited to occupancy, safety and hygiene rules.
The court case that tested the old rule ended without settling it. Carmel dropped its lawsuit against XF Property Group after the law changed, and on Sept. 15 a judge declined to make the city pay the owner's legal fees. Current in Carmel noted that the ruling didn't decide whether the city's former restriction was valid.
The city's FAQ now states that owner-occupied short-term rentals need a permit and non-owner-occupied ones need a BZA special exception under Ordinance Z-706-26. For short stays, then, the city's own rules and an HOA's covenants are separate layers, and both can apply.
Where This Shows Up in a Transaction
Here's how the questions change depending on when someone owns the home.
| Question during a purchase | Through Dec. 31, 2027 | From Jan. 1, 2028 |
|---|---|---|
| Who limits long-term rentals in the subdivision? | The city's 10% cap, plus any HOA covenant | Only an HOA covenant, if there is one |
| Who votes on adding an HOA rental cap? | Homestead owner-occupants, under HEA 1210 | Homestead owner-occupants, under HEA 1210 |
| Does a rented home need city registration? | Yes. A new owner re-registers after a sale | The city has said the registry will continue |
| What governs stays under 30 days? | City permit or BZA special exception, per the city FAQ, plus any HOA covenant | Same, unless the city changes it |
For a buyer comparing two subdivisions, the right-hand column is the one that lasts. After 2028, any rental limit in a subdivision is only as firm as its covenant language and whether the association has voted to adopt one. If you plan to rent the home out at some point, a covenant adopted next year could matter more than anything in today's city code.
Sellers are on the other side of the same question. Whether a subdivision allows rentals affects which buyers can make an offer, so the covenant packet belongs in the conversation before the listing goes live, not after an offer comes in.
Everything here is general information, not legal advice. Covenant language and voting procedures vary from one association to the next, so confirm your own situation with the HOA and a real estate attorney before relying on it.
A Market With Room to Read the Documents
The timing works in a careful buyer's favor. Across Hamilton County in September 2026, the Indiana Association of REALTORS county report showed a median sale price of $465,000, up 1% from a year earlier, with 547 closed sales, up 4%. Median days from listing to pending was 29 that month, up 53% year over year, and months of inventory was 2.2. These are countywide, all-residential figures, not Carmel-only figures. Still, prices barely moved while homes stayed on the market longer, which means a buyer in the county this fall generally has more time to ask for HOA documents and read them before committing.
More rule changes are coming, which is one more reason to read carefully. A separate state law, HEA 1001, required Carmel to review its zoning, and the Plan Commission held that hearing Aug. 18. Axios Indianapolis reported that planning administrator Adrienne Keeling said 76.8% of the city's land allows only single-family housing, and that any zoning changes would still have to go through the Plan Commission and City Council. Carmel's housing progress report is due to the state by Jan. 1, 2027.
Frequently Asked Questions
Is Carmel's 10% rental cap still in effect? Yes. State law lets Carmel enforce it through January 2028, and city officials have said they intend to keep it running until then.
Can an HOA in Carmel cap rentals on its own? HEA 1210 allows HOAs to set rental caps, and only homestead residents vote on them. Whether a particular association has done so depends on its own covenants.
Does buying a rented home carry over the seller's city registration? No. The city's FAQ says a new owner must re-register after a sale.
Rental rules are about to become one of the biggest differences between Carmel subdivisions that look alike on paper. Team Deck reads covenant packets alongside comps for buyers and sellers across Carmel. If you own a home here and want to know how your association's documents could affect your buyer pool, request a complimentary home valuation and we'll go through both with you.
