Dumpsters overflow with trash at Bingham Square Apartments in January 2023. The apartments in Anderson are owned by Property Resource Associates, based in Palm Beach County, Florida. Richard Sitler | The Herald Bulletin
INDIANAPOLIS — Apartments infested with mice or mold. Rental units exposed to the elements because of structural issues or flooding. Broken furnaces and refrigerators.
Aaron Spiegel, director of the Greater Indianapolis Multifaith Alliance, has heard it all from tenants who live in Indiana’s substandard housing. He also knows that when those tenants complain, it does little to persuade landlords to fix the problems. In many cases, Spiegel said, tenants who file complaints get evicted.
That’s because most of the worst landlord violators in Indiana are out-of-state investment companies that have purchased large swaths of the state’s rental housing. Many of those properties are targeted at low-income residents who have few resources to fight back.
Armed with lawyers, these investment companies are ready to evict at a moment’s notice and confident they’ll never have to put a penny into repairs, explained Spiegel, who organizes faith communities to push for better housing laws and tenant protections.
“It really is Indiana's dirty little secret,” he said. “It's a serious problem.”
‘NOT A FAIR FIGHT’
Out-of-state companies are responsible for most code violations in Marion County.
During a six-month period in 2022, the top eight companies receiving the most tenant complaints were all corporate investors.
Of the 77,000 rental parcels in Indianapolis, just 100 account for a third of all complaints in the city, according to a report from SAVI, a policy program of The Polis Center at Indiana-Purdue University Indianapolis.
The amount of property that corporate investors are buying in Indiana continues to grow.
In 2012, investors were responsible for less than 15% of residential single-family property purchases in Marion County. By 2021, that number had climbed to 26%, according to a 2022 report by the Fair Housing Center of Central Indiana.
In Indianapolis and the surrounding area, institutional investors purchased 15% of all housing in the third quarter of 2022, ranking it 10th in the nation for corporate-bought housing, according to a study by ATTOM, a property data company. Many of those properties are turned into rental units.
Indiana’s housing policies attract out-of-state corporations because the polices offer tenants little or no recourse to get basic housing issues fixed while giving companies near-total authority to evict with impunity, according to Jacob Purcell, a researcher at Indiana University.
In the Hoosier state, local municipalities are responsible for code enforcement and can issue fines. But those departments are understaffed with limited legal teams to force corporate violators to pay up or make repairs.
“You've got these small municipalities … going up against these behemoth corporations located on the coasts that have access to some of the most sophisticated lawyers,” said Purcell, who authored a report detailing the state’s public and private habitability enforcement mechanisms.
“It's just not a fair fight. Municipalities are able to do very little to try to motivate these out-of-state buyers to do anything.”
‘A HUGE MONEYMAKER’
The same goes for Hoosier tenants, whose only recourse is to sue their landlord and ask a court to either force the owner to make the fix or pay damages. That’s problematic, Purcell argued, since many living in substandard housing are low-income residents with no resources to sue a corporation stacked with lawyers.
Nearly every state has rent-escrow laws that allow tenants to stop paying their rent until their landlord restores habitable conditions. Indiana is one of just six states without such a policy, according to Purcell’s report.
That leads corporate investors to big profits while tenants suffer in sometimes unhealthy living conditions with no practical recourse for relief, he noted.
“It's lucrative in the sense the vast majority of wrongdoers just don’t engage in any kind of meaningful upkeep,” Purcell said. “It's much more profitable for them to ignore all of these repairs and rent it out to tenants.”
The extent of how lucrative it can be is demonstrated by how these companies do business, according to Spiegel of the multi-faith alliance.
“It's got to be a huge moneymaker if it's cheaper for them to have a team of attorneys on retainer, versus making repairs and keeping people happy,” he said.
Companies know low-income residents who can’t find other housing will simply accept substandard conditions just to have a roof over their heads.
That’s become even more true as vacancy rates hit all-time lows and affordable housing options continue to shrink following the pandemic, when demand for rentals skyrocketed.
As a result, companies can get away with increasing rent on units that have mold or mice, Purcell reported. When low-income tenants can’t afford the rate increase and miss a payment, they’re evicted and someone else moves into the substandard unit who can make the payment.
‘SQUEEZED OUT THE BACK’
Andrew Bradley, policy director at Prosperity Indiana, the state’s community economic development association, said that’s happening all across Indiana as the most vulnerable Hoosiers are kicked to the curb after missing a payment on their increased rent.
“The bottom line of all these price increases and lack of supply is people being squeezed out the back,” he said. “Landlords can charge another 30 to 50% and get somebody who's willing to pay it, so they just file an eviction on the tenant. Indiana law just makes it way too easy.”
Out-of-state investors who own large apartment complexes are filing more of those kinds of evictions than anyone else, according to the SAVI report.
In Indianapolis, although only 14% live in large apartment buildings, 65% of all eviction filings occurred in those complexes. Of the 7,500 evictions at those properties, 58% of filings came from only 25 firms.
It’s not just in Indianapolis. Indiana had one of the highest eviction rates in the country both before and during the pandemic, according to the Eviction Research Network.
The trends show no signs of changing as Indiana legislators continue to ignore policies that could bolster tenant protections, according Spiegel.
A case in point was Senate Bill 202, which his nonprofit supported. The bill would have implemented a rent-escrow law allowing tenants to pay rent to a court until a landlord makes repairs.
That proposal was gutted from the bill and never made it out of a Senate committee during the 2023 legislative session.
“Housing advocates hoped that Indiana legislators would finally send the message that the citizens of Indiana come first, that human dignity is a Hoosier value, and that housing is critical to human well-being,” Spiegel wrote in an op-ed.
“Sadly, again, not this time.”
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