Hi MajorTom
I can see why you have been mulling over this decision for a while - your two options look relatively finely balanced.
If I was in your position, and I had to make the decision today, I would personally take option 1 and port the tracker.
The spread between the projected net yield on your current home and the rate at which the purchase of that property is being financed would fall some way short of what I would consider an acceptable level of compensation for the risks involved. Also, you really need to have a decent cash reserve or buffer in place before entering the property rental business and there appears to be significant other demands on your savings at the moment.
Having said that, I think I would try and delay the decision for a while if at all possible. The low rate on your tracker presumably puts you in a good position to add to your cash savings and hopefully you will continue to reduce your negative equity position as you continue to make principal repayments on your mortgage.
Are you currently receiving mortgage interest relief? You may well have two years worth of relief left if you hold off making the move so, if relevant, I would include that in your deliberations.