Average vanilla buy-to-let yields fell slightly from 6.3% in Q3 2011 to 6.1% in Q4 2011.
Semi-commercial yields were bettered only by the 9.9% yield on houses of multiple occupation.
David Whittaker, managing director at Mortgages for Business, said: “We have broadened our analysis to cover freehold buildings where there is a small commercial element but the greater part is residential.
“This is in response to demand from landlords whose portfolios are more diverse than the categories we have covered thus far.
“We hope it generates greater debate for those many landlords being pressured to refinance by the Irish banks and closer to home, RBS and Lloyds Banking Group.”
The average loan to value for semi-commercial property was 62% - slightly lower than in the other complex categories.
Mortgages for Business said this reflected the fact LTVs for commercial properties are typically lower than buy-to-let mortgage transactions.
Yields and LTVs for complex buy-to-let deals rose slightly in Q4, reversing the trend of declining yields in Q3. The average loan to value rose from 66% in Q3 to 69% in Q4, while the average yield rose from 9.3% to 9.9%.
Multi-unit freehold blocks provided investors with yields rising from 6.9% to 7.1% between Q3 and Q4. The average loan size on a multi-unit freehold block increased by 52% to £574,258. This reflects the more expensive properties that were bought in Q4. The average property value for multi-unit freehold blocks jumped from £603,583 in Q3 to £938,602 in Q4.
The number of products on the market rose by 48% in the last three quarters of 2011, falling slightly from 455 in Q3 to 442 in Q4, reversing the positive trend of three consecutive quarters of growth.
Abbey for Intermediaries was the only new entrant to the lending market over the last three months of the year, taking the total number of buy-to-let lenders to 25.
Mortgages for Business said the rise in the number of lenders over the course of 2011 reflected an increased appetite for products from buy-to-let investors who were being seduced by low property prices and high rental yields.
Yields in property have remained higher than in other traditional asset classes, which is supporting high demand.
Whittaker said: “The average number of products available has fallen marginally but that’s more a reflection on an exceptionally strong third quarter than it is of a market slowdown.
“Buy-to-let is one of the few segments of the mortgage market that is really flourishing and investors are still seeing strong returns.”
Whittaker added that yields on buy-to-let were much stronger than in other asset classes which is still tempting an increasing number of investors into the market.
He said: “Mortgage finance remains restricted for potential owner-occupiers, meaning there is a vast backlog of buyers who are confined to the rental sector.
“This is keeping demand astronomically high and pushing up the cost of renting into uncharted heights.
“With economic conditions congealing, property prices will remain low and demand for rented property should hold steady meaning the healthy returns available from buy-to-let show no signs of abating.”
