Go off the Cretan track for a bargain

Owners of second homes abroad tend to have a financial status that is irritatingly elusive. The Dordogne, the Algarve and Andalucia have long seemed no-go areas to your "average" person - the exclusive provenance of those made rich by City bonuses.

Owners of second homes abroad tend to have a financial status that is irritatingly elusive. The Dordogne, the Algarve and Andalucia have long seemed no-go areas to your "average" person - the exclusive provenance of those made rich by City bonuses.

But I hadn't reckoned on Crete, which has stubbornly remained cheap, particularly in the east. Taking time off from a holiday there, I discovered that you can buy a traditional, three-room house - admittedly in need of renovation - for £5,000.

A bigger one, in good enough nick to live in, costs £12,000, while a nine-room, 16th-century Venetian tower in the hills above Rethymnon would be around £100,000. Perhaps this pad in the sun game was more egalitarian than I'd thought.

Eric and Angie Baker quelled their fears and bought a tumble-down pile just outside Elounda for 5.5m drachma (£12,000). Over drinks on their new roof terrace, they explained it was Crete's superb walking country that had swung it. They have just completed £20,000-worth of renovations.

"Buying in Greece is basically easier and quicker than buying in England," says Mr Baker. "But we needed help. The owner tried to raise the price after the sale had been agreed. Luckily we knew someone out here who had already bought in Crete, and they sorted it out."

The Bakers bought through Crete Property Consultants, which has 150 or so houses on its books at any one time. Owner Oonagh Karanjia had her fingers burnt when she bought a ruin eight years ago and now happily offers free add-on advice to her clients.

That involves putting potential purchasers in touch with her representatives in Crete who, in turn, recommend lawyers, local builders and electricians for renovations.

Cash purchases are the name of the game - Greek mortgages don't really exist. Ms Karanjia estimates that the conveyancing and other costs of a property in Crete work out at no more than 10 per cent of the selling price. Most places are cheap so fees don't make a hole in the pocket.

Most British people come on a speculative visit combined with a holiday. If a property catches their eye, she recommends they set the wheels in motion by giving a lawyer power of attorney to conduct a search before they go home.

Typically, on a Dr12m house, the search fee costs Dr60,000, power of attorney Dr50,000, notary fees Dr125,000, lawyer's fees Dr50,000, house of contracts agreement Dr25,000 and purchase tax Dr120,000. A survey and paying an accountant to get you a tax number on top of that brings the conveyancing bill to about Dr550,000.

Running costs are cheap too. A solar panel (costing about Dr110,000 to install) cuts electricity bills drastically. There are no rates to pay as such and, bizarrely, the cost of rubbish collection and the TV licence are lumped in with the electricity bill, which for a three-bedroomed house came to Dr10,895 in winter.

Water rates are Dr79,950 a year at the most. Telephone rental and calls are about the same as in the UK. Home insurance is Dr116,000 a year for a three-bedroom house.

"People who buy in Crete tend to be independent types," says Ms Karanjia. "They buy because they love the island and mix with the Greeks rather than stick in national cliques.

"Some purchasers make a point of shipping out British builders, but they invariably come unstuck and come back to us for help. The Greek electrical system, for example, is a law unto itself and only a Greek can unravel it. But there again, you have to be careful: everyone's brother is an electrician - we can recommend reliable ones."

Rents, arranged either privately or through a company such as Simply Crete, can bring in a reasonable income. With the pound so strong against other currencies, there has never been a better time to buy abroad.

And while prices in western Crete are climbing, the other end of the island remains relatively undeveloped - beyond the lager madness of Malia, at least. Greece is likely to join the euro next year, which will send prices up, so for about 12 months the ridiculous prices will probably stay.

Penelope, nicknamed the duchess of Milatos, stood outside her sprawling eight-room, single-storey, stone house, where she'd spent every day of her 87 years. It was finally getting too much for her to look after alone and she was off to Athens to live with her son.

When we arrived she'd just finished making feta cheese, and six blocks sat proudly maturing on a plank above the front door.

The geraniums in the secluded 250 sq metre plot of land were a riot of red, the well still worked, and she pointed out the sparkling Aegean through the branches of her fig tree. The walls of her house were the optimum 50cm thick, keeping the inside warm in winter and cool in summer. There was a shaded courtyard, cool passageways and two big arched doorways. Price: £40,000. She was having difficulty finding a buyer.

The house that caught my eye was tiny, a two-room rustic workman's listed cottage in a conservation area, fringed by mountains, next to a winter stream and five minutes from the sea. The garden was idyllic with olives, figs, capers and cactus. A little resort with plenty of restaurants, shops and banks was five minutes away.

There would be no difficulty in renting the house out at about £150 a week. The water came from a mountain spring but it had no electricity. This would cost £1,000 to install. I was also advised to install a computerised sprinkler to prevent the garden turning into a desert. The septic tank also needed some attention. Price: tempting at Dr16m.

And I'm still trying to decide whether I should step on to the bottom rung of that second home owners' ladder.

* Contacts: Crete Property Consultants, tel: 020 7328 1829, website: www.fopdac.com. See also: www.crete-homes.- com; www.forth.net.gr; www.euroland-crete.com; www.ktimatoemporiki.gr