Despite the treasury’s proposal to change the guidelines on how second homes achieve tax benefits and the warning of capital gains tax increases, the number of second homes flooding the market did not happen as analysts had thought. Instead there has been an increase in second home purchases. The number of second homes owned has reached a record high of 245,384 and is expected to reach 250,000 by end of year.

It is thought that the great summer weather, number of Britons staying closer to home for holiday travels and low interest rates have contributed to the increase.

"Interest rates are much lower than they were in the early Nineties, which has reduced both the cost of acquiring property and the attraction of keeping money in cash," said Liam Bailey, head of residential research at Knight Frank.

"While credit has been severely constrained for home buyers requiring high loan-to-value ratios, wealthy investors with large amounts of equity have been able to take advantage of low financing costs."

More than a luxury for the owners, second homes are being used for holiday-let income, taking in 5 to 7 per cent more gross income per year than regular longer term rental properties. With a 2.6 per cent more Britons per year expected to holiday at home and the incoming tourists for the Olympic Games in 2012 looking for places to let, more will be looking to invest in second homes for the holiday-let market.

Changes proposed by the treasury on the ability for second homes to qualify for tax advantages, will be that a home must be available for letting 210 days a year, rather than 140. Also the property must be let for 105 days rather than the now required 70. As of now income losses on the property can be offset against the owner’s total income. The new proposal will have the losses carried forward against future profits the property would gain.