
Landlords have more home loan deals at lower rates to choose from in the market than a year ago, according to data from Moneyfacts.
These types of options may become more popular in the months ahead, “particularly if the Budget rumours of levying national insurance on pre-mortgage profits become reality,” adds the data firm.
It points out that there are now 776 two-year and 954 five-year fixed-rate loans available to landlords, a combined total of 1,730 options, up from 841 in October 2023.
The cost of deals have also fallen over the past two years, with the average two-year fixed rate now 5.04% for a buy-to-let mortgage for limited companies, down from 6.53% in October 2023. Year-on-year, the two-year rate is down from 5.54%.
The data comes after a range of property tax rises that were leaked to the press in the summer, which Chancellor Rachel Reeves is understood to be considering to help plug a £20bn to £30bn black hole in the public finances when she lays out Labour’s Budget on 26 November.
One of which is a proposal to apply national insurance on landlord rental income, in a move the Treasury hopes will raise £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, said adding this new tax on landlords would hit 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.”