Landlords currently have access to a wider selection of home loan deals at lower rates compared to a year ago, according to Moneyfacts.

These loan options could become increasingly popular in the coming months, “particularly if the Budget rumours of levying national insurance on pre-mortgage profits become reality,” the data firm adds. At present, there are 776 two-year and 954 five-year fixed-rate loans available to landlords—a total of 1,730 options—up from 841 in October 2023. Over the past two years, mortgage costs have also declined. The average two-year fixed rate for buy-to-let mortgages for limited companies now stands at 5.04%, down from 6.53% in October 2023. Year-on-year, the two-year rate has fallen from 5.54%.

This data follows a series of leaked property tax proposals over the summer. Chancellor Rachel Reeves is reportedly considering these measures to help address a £20bn to £30bn gap in public finances ahead of Labour’s Budget announcement on 26 November. One proposal includes introducing national insurance on landlord rental income, a move the Treasury expects could generate £2bn.

Moneyfacts finance expert Rachel Springall says: “Unlike other reforms that gradually hit landlords, this could become a significant move to lead more landlords into setting up a limited company for their buy-to-let property portfolio.”

Springall adds: “This has been a growing trend over recent years due to reductions in mortgage interest tax relief, which was gradually phased out between 2017 and April 2020. Due to this, new landlords might never have had this relief, but that does not mean they are not facing their own challenges to turn a profit on their investment.”

Last week, the Independent Housing Policy and Delivery Oversight Committee, chaired by former Liberal Democrat leader Sir Vince Cable, warned that introducing this new tax on landlords could affect tenants.

Cable said: “Putting national insurance tax on landlords would be most likely to lead to higher rents for tenants. That is, in effect, an increase in taxation on working people.”

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Source: MortgageStrategy