Indiana Just Banned Cities from Capping Short-Term Rentals. Here Is What HEA 1210 Actually Does.

Indiana’s new short-term rental law, HEA 1210, went from bill introduction to the governor’s desk in less than two months. Governor Mike Braun signed it on March 12, 2026, and starting July 1, Indiana cities will no longer be able to cap how many residential properties in a given area can be used as rentals. Yes, that includes your Airbnb.

If you are an STR host or investor in Indiana, this matters. If you are watching the national preemption wave from another state, this matters too. Indiana is now the third state in 2026 to draw a line between state authority and local rental restrictions, joining Idaho (HB 583) and Arizona’s ongoing legislative battle over HB 2429.

But HEA 1210 is not a blanket deregulation of short-term rentals. It is narrower than it looks at first glance, and the details matter. Let me walk you through what the law actually says, what it does not say, and what it means for hosts in Indianapolis, Bloomington, South Bend, and beyond.

This article provides general information and should not be construed as legal advice. Consult a qualified attorney in your jurisdiction for advice specific to your situation.

What HEA 1210 Actually Prohibits

The core of HEA 1210 is a single prohibition: Indiana cities, towns, and counties cannot adopt or enforce any ordinance, resolution, regulation, policy, or rule that “prohibits or restricts an owner of a privately owned residential property from using the property as a rental property.”

In practical terms, that means no more numerical caps on how many homes in a neighborhood, subdivision, or city can be rented out. If a city passed a rule saying “only 10% of homes in this subdivision can be rentals,” that rule is dead as of July 1 (or January 2028 for Carmel and Fishers, but we will get to that).

The bill passed the Indiana House with an overwhelming 82-1 vote, then cleared the Senate on February 24, 2026. This was not a close call.

What Cities Can Still Do

Here is where hosts and investors need to read carefully. HEA 1210 does not strip cities of all regulatory authority over rentals. It specifically preserves the ability to enforce:

• Building and fire codes. Your rental still needs to meet structural and fire safety standards.
• Health and safety standards. Smoke detectors, carbon monoxide detectors, clear egress paths. The basics.
• Reasonable occupancy limits. Cities can still set how many people can stay in a rental unit.
• Registration and inspection programs. Permit requirements, annual inspections, and rental registries remain lawful.

The critical qualifier: these measures cannot “function as a de facto rental cap.” If a city creates a permitting process so burdensome that it effectively limits the number of rentals (think application windows that only allow 50 permits per year, or inspection backlogs that stretch into decades), that would likely run afoul of the law.

Picture this: you are an investor who just closed on a duplex in Broad Ripple. Under HEA 1210, Indianapolis cannot tell you that your neighborhood already has too many rentals. But they absolutely can require you to register the property, pass a safety inspection, and pay the ( permit fee. The city keeps its regulatory toolkit. It just cannot use that toolkit to limit how many people use it.

The Carmel and Fishers Carve-Out

The most politically interesting piece of HEA 1210 is the transition provision for Carmel and Fishers, two affluent Hamilton County suburbs north of Indianapolis.

Starting January 1, 2026, Fishers implemented an ordinance capping new single-family rentals at 10% per subdivision. Carmel followed with a similar cap effective February 1. These were believed to be the first ordinances of their kind in the country, and they were a direct response to residents’ concerns about large, out-of-state investment firms buying up single-family homes and converting them to rentals.

HEA 1210 gives both cities a grace period. Their existing caps can remain in effect until January 1, 2028. After that date, the caps must go. And in the meantime, no other Indiana city can enact similar caps. The legislature essentially said: “Carmel and Fishers, you get a runway. Everyone else, do not even try.”

Fishers Mayor Scott Fadness pushed back publicly, noting that the city’s rental registry policy was the product of more than two years of research, analysis, and public engagement. “For years, residents across Fishers raised serious concerns about the growing number of large, out-of-state investment firms purchasing single-family homes and converting them into long-term rentals,” he stated.

That tension between local control and state preemption is not unique to Indiana. It is the exact same fight playing out in state capitals across the country right now.

The HOA Provision That Nobody Is Talking About

Buried in the conference committee report is a provision that could reshape how homeowners associations handle rental restrictions going forward.

Under HEA 1210, only HOA members who use their property as a homestead (meaning their primary residence, qualifying for Indiana’s homestead property tax deduction) may vote on two things:

1. Any prohibition or restriction on using a residential property as a rental.
2. Any restriction regarding the use of property as a rental.

Board service eligibility for rental-related decisions carries the same homestead requirement. Developers are exempt while they still own subdivision lots.

This is a significant shift. It means investor-landlords who do not live in their properties cannot vote to restrict other owners from renting. The practical effect: if your HOA has a growing bloc of non-resident investors, those investors cannot band together to limit competition by voting to cap rentals. Only the people who actually live there get a say.

Whether you see that as fair governance or as a limit on property rights depends on which side of the rental equation you sit on. I have reviewed enough HOA bylaws to know that this provision alone will generate its share of heated board meetings.

What This Means for Indianapolis STR Hosts

Indianapolis is Indiana’s largest short-term rental market. StaySTRA data shows 5,552 active short-term rentals in the Indianapolis market, with an average nightly rate of > and occupancy running at 56.7%.

The city already requires a Short-Term Rental Permit through the Department of Business and Neighborhood Services. That permit costs ( (one-time fee) and must be renewed annually. Hosts must register each unit and comply with building and health codes, including functional smoke detectors, carbon monoxide detectors, and clear egress paths.

HEA 1210 does not change any of that. Indianapolis was not capping rental numbers. The city’s approach has been permitting and registration, not numerical limits. So for most Indianapolis hosts, the practical impact of this law is minimal in the short term.

The longer-term implication is more interesting. HEA 1210 removes one tool from the city’s future regulatory toolkit. If Indianapolis were ever to consider a cap on STR permits (as cities like New York and New Orleans have done), that option is now off the table. The city can tighten its permitting requirements, increase inspection frequency, or raise fees. But it cannot say “we have enough rentals, stop issuing permits.”

For investors considering the Indianapolis market, that is a form of regulatory certainty. You can run the numbers on a property with reasonable confidence that the state will not allow the city to shut the door behind you.

Bloomington and South Bend

Indiana’s two other notable STR markets operate under their own regulatory frameworks, and both remain largely unaffected by HEA 1210 in practice.

Bloomington requires a local permit and charges annually. The city, home to Indiana University, has steady demand for short-term accommodations during football weekends, graduation, and other university events. Bloomington has not attempted to cap rental numbers, focusing instead on its Rental Occupancy Inspection Program.

South Bend requires landlord registration through Neighborhood Services and Enforcement at a modest \ per owner. The city also runs a Rental Safety Verification Program that requires occupancy inspections. Like Bloomington, South Bend has relied on registration and safety requirements rather than numerical caps.

For hosts in both cities, HEA 1210 does not change the day-to-day. But it does remove the possibility that either city could pivot to a cap-based approach in the future.

Where Indiana Fits in the 2026 Preemption Wave

Indiana is now part of a growing pattern. In 2026 alone:

• Idaho passed HB 583, signed by Governor Little on March 16, which prevents cities from banning or effectively prohibiting short-term rentals. Idaho went further than Indiana by explicitly addressing STRs.
• Arizona is debating HB 2429, which would roll back its existing 2016 preemption law and allow cities like Scottsdale and Sedona to impose local STR regulations for the first time in nearly a decade.
• Pennsylvania introduced HB 2303, which would create the nation’s first statewide STR framework with a three-tier registry system, but notably does not preempt local authority.

The through-line: states are drawing new boundaries around what cities can and cannot do with rental regulations. Some states (Idaho, Indiana) are pulling power toward the statehouse. Others (Arizona, potentially) are pushing it back to city hall. The direction depends heavily on whether a state follows Dillon’s Rule (local governments only have powers explicitly granted by the state) or Home Rule (local governments have broad authority unless the state says otherwise).

Indiana is a Dillon’s Rule state. The legislature giveth, and the legislature taketh away. HEA 1210 is the legislature saying: rental caps are not a power we are granting to cities.

What HEA 1210 Does Not Do

A few common misconceptions worth clearing up:

• It does not legalize short-term rentals statewide. Indiana already had HB 1035 (from a prior session) that prevented municipalities from banning STRs entirely. HEA 1210 adds a new layer by prohibiting caps on rental quantities.
• It does not eliminate local permitting. Cities can still require permits, registrations, and inspections. They just cannot use those systems to limit the number of rentals.
• It does not override HOA rental bans. HOAs can still restrict or prohibit rentals. The new provision only changes who gets to vote on those restrictions (homestead members only).
• It does not apply to commercial properties. The law specifically covers privately owned residential property.

We do our best to keep our regulatory guides accurate and up to date, but ordinances change and we are only human. Always verify current requirements directly with your local municipality before making business decisions.

The Bottom Line for Indiana STR Investors

HEA 1210 is not a revolution. It is a guardrail. Indiana was already one of the more STR-friendly states in the Midwest, and this law reinforces that position by removing one specific regulatory tool (numerical caps) from the local government playbook.

If you are already operating in Indianapolis, Bloomington, or South Bend, keep doing what you are doing. Your permits, inspections, and tax obligations remain unchanged.

If you are considering entering the Indiana market, this law provides a baseline of certainty. The state has now said twice (first with HB 1035, now with HEA 1210) that it will not allow cities to shut the door on rental property owners. That is a signal worth paying attention to.

Want to see whether the numbers work for a specific Indiana property? Run it through StaySTRA’s free analyzer and check the market data for Indianapolis or any other Indiana city.