According to research by Mortgages for Business, Houses in Multiple Occupation (HMOs) produced even better yields, averaging 9.3% in the third quarter.

However, this was slightly down on the figure of 10% for Q2.

Mortgages for Business claimed that a continuing rise in demand for rental property is pushing up rents and yields.

Strong demand is also causing a rise in the number of buy-to-let products available and lenders in this sector.

The total number of buy-to-let deals has risen for the third quarter in a row and was 26% higher in the third quarter of the year than the second, with 508 buy-to-let mortgages currently on the market from 23 lenders.

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David Whittaker, managing director at Mortgages for Business, said: “This is the third straight quarter in which the number of buy-to-let deals has risen in response to overwhelming demand from professional investors.

“However growth over the last three months slowed to 25%, having risen 35% in the previous quarter suggesting a seasonal fluctuation during the summer.

“It will be interesting to see if the figure rises again at the end of the year.

“With the base rate set to remain low for the medium term, property prices falling and demand from tenants showing no signs of dropping, investors will continue to capitalise on the healthy returns available from the buy-to-let market.”