Rental property in pension

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Bill90.

Registered User
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Hi everyone,

Can anyone tell me how buying a property in a pension works. Seems a very attractive proposition but I'd love to hear from someone who's done it.

Is a 50% Ltv possible?

Can rents be invested into a vanguard etf?

How to pay for maintenance if its through a pension?

Currently have a non standard execution only PRSA with Davy and invest in a vanguard world etf.

Thanks.
 
The rents will need to go to servicing the loan (if you can find a lender), paying maintenance costs, paying the property manager and paying the pension provider. Unlikely to be anything left to invest in ETFs.

And don't forget it's not a sensible investment, unless part of a much larger overall portfolio.
 
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And now I have a vague notion that there may now be a restriction on investing more than 50% of a pension in property (or is that just for exec pensions?)
 
I have a property within my pension fund but it's not the only asset, nor should it be, as @Fortune points out.

Bill90. said:
Is a 50% Ltv possible?
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Yes, at a maximum. Loan must be capital and interest and maximum term is the shorter of your retirement age or 15 years. I haven't looked at lending for one of these for several years. There used to be only one lender, Dilosk trading as ICS who lent to self-administered pensions and the rates were always a couple of percent higher than homeloan rates. Overall it's an awful lot easier, less risky and cheaper if you can buy without borrowing, even if that means holding on for a while until you have a bigger fund accumulated.

Bill90. said:
Can rents be invested into a vanguard etf?
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You'll need to leave a certain amount of money in cash in a bank account of the pension fund to cover expenses (liquidity), but if there's enough free cash then yes you can invest in Vanguard ETFs.

Bill90. said:
How to pay for maintenance if its through a pension?
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Must be billed to the pension fund and paid from the pension fund's bank account.

Fortune said:
And now I have a vague notion that there may now be a restriction on investing more than 50% of a pension in property (or is that just for exec pensions?)
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IORPS II did bring in a restriction on Occupational Pension Schemes (including Executive Pensions) investing no more than 50% of assets in unregulated investments (including property). This doesn't affect self-administered PRSAs, Personal Pensions, Buy-Out Bonds, ARFs etc.

Regards,

Liam
www.FergA.com
 
I know a couple of people who borrowed through their pension fund and lost it all when property crashed.

The restrictions now make that a lot less likely. However, I really don't think that pensions should borrow at all other than maybe 10% or so to buy a particular property.

But even then, putting all your pension fund in just one asset? Do you really think that is a good idea? Maybe if you are 30 and will diversify your wealth over time into other assets.

Brendan
 
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