New pension proposals could have a detrimental impact on the supply of rental properties in this country and in turn exacerbate continuing housing problems.

Property is a popular investment choice within self-administered pensions. The tax advantages of property, as well as its potential to provide a steady, long-term income stream in retirement, are among the reasons that some people choose to buy property through their pension.

So, it’s perhaps no surprise that self-administered pensions currently hold more than 12,000 individual residential units across the country.

But new proposals under consideration could sound the death knell for pension investing in property in Ireland, at a time when this country needs all the rental properties it can secure.

Under these proposals, put forward by the Pensions Authority, holders of Personal Retirement Savings Accounts (PRSAs) would be required to predominantly invest their pensions savings in regulated markets.

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This could mean that PRSA holders, specifically holders of non-standard PRSAs, would no longer be able to invest in individual properties through their pension, or in a best-case scenario, would only be able to invest up to half of their PRSA fund directly in property.

Property is not the only asset class that people could be restricted from investing in under the new proposals.

If the Pensions Authority restricts the investment of PRSAs to regulated markets and funds, it might no longer be possible to invest more than 50 per cent of a pension fund in other assets including loan notes, infrastructure, renewable energy and venture capital.

However, it is the proposed restriction on property investments that could leave a bitter taste in the mouths of those who have invested their pension in property, or who wish to do so – and if such a restriction is introduced, this bitter taste will likely trickle down to the many people in this country that are struggling to get rental accommodation. In turn, this could cause a significant headache for the Government.

While the Pensions Authority proposals are no doubt well-intentioned and are being introduced in response to concerns over the suitability of certain asset classes as pension investments, it is our view that property should definitely not fall within the scope of the restrictions being considered.

Ireland is currently facing a significant shortage of rental properties, with a growing number of private landlords exiting the sector

While due diligence is important with any investment, having property in the mix for a pension can stand to an investor – particularly if the market and timing are on side. There is a cohort of pension holders who wish to invest in property as they feel they may have the potential to make better returns on such products.

For these investors, the tax benefits to purchasing a property within a pension are hugely attractive. The benefits include the capital gains tax (CGT) exemption for any profit earned from the sale of properties owned by a pension scheme.

In addition, any rental income earned is tax-free and not subject to income tax in the way that an investment property owned personally outside of a pension can be.

It must be noted, too, that while residential property investment in Ireland is not regulated as a financial product, it benefits from a wide range of embedded legal and structural protections.

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For example, property ownership is underpinned by the Land Registry system and solicitor-led conveyancing, which significantly reduces title and transaction risk.

Planning and building control laws, including certification requirements for newer builds, protect buyers from defective or unauthorised development, while deposits on new homes are typically safeguarded through solicitor stakeholder arrangements.

Investors using finance benefit from Central Bank of Ireland mortgage rules and regulated lenders, ensuring transparency and fair treatment. A clear and established tax regime, public access to transaction data through the Property Price Register, regulated valuation standards and well-defined insolvency rules together create a high degree of legal certainty and market transparency, even in the absence of formal investment regulation.

Ireland is currently facing a significant shortage of rental properties, with a growing number of private landlords exiting the sector. Recent figures from property website Daft.ie show that the number of available rental homes has dropped to just 1,901, down 21 per cent on the same time last year.

In addition, there was a 35 per cent increase in eviction notices issued to tenants by landlords in the third quarter of this year when compared to the same period in 2024, with 61 per cent due to landlords selling properties.

Small landlords leaving the market could push the number of eviction notices higher.

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By contrast, those who hold properties through their pensions make excellent long-term landlords due to the stability and longevity stipulated by Revenue rules, which require such properties to be held for extended periods.

These pension property holders are not permitted to trade or speculate on property, ensuring their investments remain steady. In addition, pension property holders support access to affordable housing, as they may be more open to housing assistance programme (HAP) or other State-supported tenants than other landlords are.

There is no good reason to stop people investing in property through their pension. If pension property investing is curtailed on foot of the proposals being considered, many pension holders who have opted for this route will lose out financially because the alternative asset classes available to them are unlikely to offer the same tax advantages and potential for returns.

From the Government’s perspective, it would simply be shooting itself in the foot on the housing crisis. Ultimately, if properties are pulled off the market on foot of these proposals, it is the many tenants desperate for rental accommodation that will be in the firing line.

Glenn Gaughran is head of business development with Independent Trustee Company