Research by Arla shows an 11.6 per cent increase in the average capital value of rental houses from £401,400 to £447,900 for the first three months of 2011, above the last market peak of £442,600 in 2007, thanks to an influx of high value properties into the space.

The trade body said this growth was driven by London and the South East, with a 14.8 per cent increase in average capital value in central London and 16.2 per cent in the rest of the South East.

The rest of the UK experienced a drop of 5.2 per cent.

Ian Potter, operations manager of Arla, said the association believed the increase in the overall average capital value of rental properties had been driven by different types of home being offered to let.

“Today’s housing climate and uncertainty around jobs and income means many people are choosing to let rather sell their home, causing an increase in the number of family-sized homes available to rent.”

Arla’s research shows that, of the 39 per cent of Arla members reporting an increase in property coming onto the market because it could not be sold, the biggest proportion was for family-sized homes, with 66 per cent reporting an increase in semi-detached and 63 per cent reporting an increase in detached houses.

Mr Potter said: “While these changes do not necessarily mean individual properties are worth more money, they do indicate that there is increasing flexibility in terms of the types of property available to would-be tenants in the private rental sector.”

David Whittaker, managing director of Kent-based IFA firm Mortgages for Business, said the Arla figures appeared to be somewhat “suspect” when compared with his own data and that of the Council for Mortgage Lenders (CML).

Mr Whittaker compared the data to the CML data on buy-to-lets which showed the average loan was £120,000 to £150,000, while the data Mortgages for Business had collated showed on average in 2010 buy-to-let property had a property value of £190,000.

He said: “The Arla figures are very high, outside the South East £447,900 would buy you a grade two listed mansion.

“It is interesting because when you get to that value the yields drop away as well.”