Cool and unusual: Snap up a property in Andorra

With great skiing, no taxes and amazing property buys, it's time to test the ice in Andorra, says Laura Latham

You may be more familiar with Andorra as a cheap ski destination rather than a tax haven, and it's true that this tiny principality, tucked between France and Spain in the Pyrenees, doesn't quite have the cachet of Monaco. However, it does offer great skiing, stunning mountain scenery and significant financial perks.

Once dubbed "Ibiza on ice", Andorra is seeing a new wave of what Tracey Chorlton, a local agent, describes as "quietly wealthy" investors looking to own somewhere that doesn't levy income tax or inheritance tax.

One legacy of the cheap skiing is some pretty ugly resorts, but away from unattractive towns, such as the capital, La Vella, there are quiet villages and beautiful mountain vistas with more restrained development. "There are some horrible urban areas," admits Chorlton, "but elsewhere, the scenery is breathtaking and the pace of life is very relaxed."

In addition to the financial benefits, there are several good things about Andorra. It's well placed for access to southern France as well as popular Spanish cities such as Barcelona and Girona. Then there's the first-class education and healthcare on offer, and a ski season lasting five months, which, due to Andorra's high altitude, is pretty snow-sure.

Andorra does attract those who want to stash away their wealth, but Chorlton says that buyers don't tend to be flashy and neither are the properties on offer. In addition, she says, prices have recently plateaued, creating a buyer's market. Her agency, Promocions l'Entrada, has studios and one-bedroom apartments priced from £110,000, with around £200,000 to £400,000 buying two to three bedrooms. Upwards of around £500,000 will get you a detached house or traditional chalet with three or more bedrooms, a garden and garage.

There are two main ski areas: Vallnord and Grand Valira. The former offers a higher proportion of expensive, detached homes, while Grand Valira has lower prices, smaller properties and more young families.

Roger Munns, of the agency Your Andorra, says the country has seen a definite surge in interest from UK investors, particularly in the most exclusive enclaves of La Massana and Anyos. Here you should expect to pay from around £800,000 for a good-size chalet. "You wouldn't even get an apartment in Monaco for that," he adds.

Munns agrees that there are areas of development that could have been done better, but he says that the government has now restricted building to preserve the countryside. It has also implemented a policy of requiring existing buildings to install traditional stone cladding to rid the streets of ugly concrete render. "Andorra used to be referred to as the poor man's Switzerland," he says, "but that isn't true now. The cost of living might be low, but the country has definitely gone upmarket."

Your Andorra: www.propertyandorra.com; Promocions L'Entrada: 00 376 851 655; www.123ple.com

Andorra Buyer's guide

* Andorra's official language is Catalan but French and Spanish are widely spoken.

* There's no income or inheritance tax, but capital-gains tax is 15 per cent on sale of property. This reduces each year, so that after 12 years of ownership, there's nothing to pay.

* A local airport is planned, but the easiest route is to fly into Toulouse or Barcelona – a two-hour drive. There are good bus connections to both airports.

* As an individual, you can only own one home, so if you want to buy more properties, you'll need to set up a private company.