Latest News from Pension Property

Saving for retirement is an important part of planning for your future. The sooner you begin saving, the better prepared you will be for your retirement – and the more benefit you will receive from the available pension tax reliefs. Effective investment of your pension scheme is one way to combat the erosive effect of increasing inflation rates.

Here are some of the key points you need to know about pension property investment:

1.      What is pension property?

Pension property offers a unique opportunity for investors to take control of their retirement fund. ITC pension investors can acquire property in Ireland or the UK as part of their investment strategy.

2.      Why invest in pension property?

You have the ability to choose the property you wish to invest in, whether it is residential or commercial. You can also use two or more pension schemes to purchase one property jointly. In certain circumstances, borrowing can be used in order to help with the purchase of property that may be valued higher than the available funds in your pension fund.

3.      And, why now?

The latest DAFT rental report states that house prices and rents continue to increase nationally, with the average market rent passing €2,000 per month for the first time ever. The average monthly rent for the first quarter of 2025 was €2,023 nationally, with average rents up 7.3% in the year to March 2025. In some areas, rental inflation is much higher than that – for example, in Limerick City, average rents increased by 20.4% in the year to March 2025. (The Daft.ie Rental Price Report 2025 Q1)

Housing prices increased by 7.5% in the year to March 2025, with the median price of a dwelling purchased in the 12 months to March 2025 at €362,500. (CSO Residential Property Price Index March 2025).

4.      What are the benefits?

Investing in pension property offers full flexibility to the investor to take control over the pension and to use their own knowledge of the market to seek out valuable opportunities. Furthermore, you will not be subject to Income Tax on the rental income or Capital Gains Tax on any gains made, and any costs in connection with the property purchase are consumed by the pension fund.

5.      What are the rules?

• The sole purpose of the investment must be to provide benefits on retirement. It cannot be used for any other purpose.

• The property purchased through a pension must be at ‘Arm’s Length’. Meaning the pension cannot buy or sell property from you, your employer or anyone connected with you.

• You cannot use the property for yourself, as personal use is prohibited.

• Pension schemes are not permitted to trade.

• The development of a property with a view to selling it is not allowed.

6.      Potential costs associated when purchasing a pension property?

When purchasing a property through your pension, you should consider some of the potential costs. These can include:

• Stamp duty

• Solicitor fees

• Insurance

• Local property tax

• Letting agent fees

• Service charges

These costs will vary depending on the type of property you purchase.

7.      What pension schemes are eligible?

In ITC you can currently purchase property through:

• Approved Retirements Funds (ARFs)

• Personal Retirement Savings Accounts (PRSAs)

• Buy out Bonds (BOBs)

• Or a combination of the above

8.      Can borrowing be used?

Borrowing can be used, however, it is not permitted for ARFs. The ITC PRSA and ITC BOB can avail of borrowing, allowing our clients to enter into investment opportunities that might not have been available otherwise. Here are some of the key rules:

• No recourse to other assets

• Interest only loans are not permitted

• No loan terms over 15 years

• No assignment of rental income.

• The loan must be paid in full before retirement.

If you are thinking on investing in property through a pension, please contact your financial advisor or email justask@independent-trustee.com.

Fiona Harris - ITC Marketing Manager