Cream Of The Country: Alderney

This tiny Channel Island is a favourite of well-heeled retirees. But now it's attracting a new breed of younger residents.

If you want to get a feel for Alderney, try flying there. On the eight-seater Islander aircraft used by the local Aurigny and Rockhopper airlines, you are allocated seats according to your weight, with the portly and sinewy balanced to smooth out the ride. You may even end up in freight class - when I visited recently, I flew alongside cabbages bound for an island greengrocer.

If you can cope with that, you will probably fall in love with eccentric Alderney, the tiny Channel Island that is three and a half miles long and one and a half miles wide, and much closer to France than to England. It is ruggedly beautiful with 50 miles of criss-crossing footpaths and a rocky outcrop that is home to 5,000 pairs of gannets.

Alderney has 2,450 human residents and boasts 20 per cent income tax - "easily avoidable" says one estate agent - plus no VAT, stamp duty or inheritance tax. But slow transport links and the vagaries of the climate make this one tax haven where there are few celebrities, and the 35mph speed limit puts a damper on living in the fast lane.

The island has escaped the planning chaos of Jersey and Guernsey, where bungalows and houses blot many views. Instead, most of Alderney's 2,000 acres are green belt, so natural farmland dominates and even extensions to the 1,100 current homes (mostly Georgian and Victorian, but some more ugly post-war styles) cannot exceed 15 per cent of floor space.

Exceptions to the no-development rule are found in 12 dramatic forts encircling the coast. They were built in the 1840s to protect the island from the French but one is now being converted into flats and another is let to well-heeled holidaymakers through heritage specialists The Landmark Trust. A third, Fort Quesnard, is on sale for £3.15m, the highest price ever asked for an Alderney home despite it having just four bedrooms and restricted outdoor space.

"Unlike other Channel Islands, you can buy a home here in your own name with no restrictions. There are no questions asked. It's also attractive to those retiring from the mainland because it's safe. We leave doors open and keep car keys in the ignition because there's no crime," claims Andrew Eggleston of the estate agents Bell & Co. Eggleston says property prices have risen 20 per cent in the past two years despite a spate of new homes including 24 near the airport, 18 at the harbour and another 18 in the Newtown area. "That represents major development in Alderney's terms," he says.

But whereas the island used to be thought of as a conservative retirement haven for the well-heeled, it is now starting to provide modern jobs for younger residents, too.

"A small island relying on air transport for business has problems if it's foggy and flights are cancelled, so we've developed an internet industry that avoids these problems," according to Ilona Soane-Sands, the island's marketing manager. "Internet gambling and financial services give a chance for real jobs instead of relying on tourism, building or fishing," she says. The electronic gambling commission has reported a £750,000 profit.

Buyers pay 5.5 per cent stamp duty and 4 per cent conge (a property tax) along with 1 per cent document duty for homes worth over £150,000. The house prices and new industries are extremely modern, but almost everything else on the island stopped in the 1960s.

The lowdown

Cost of living: You pay £200,000 for a two-bedroom flat near the cricket pitch or £450,000 for a four-bedroom house in good condition. A large stone house with an acre of land and coastal views will be £625,000. One-offs such as converted churches or forts will be more than £1m.

Attractions: Cricketer Ian Botham, commentator John Arlott and Tory grandee Edward du Cann used to live here but in the absence of celebrities, there are two 1938 London Underground carriages that criss-cross the island on an hourly basis.

Downside: Alderney's eccentric property market is hard to call - some properties find buyers within a month but one large home has been on the market for 13 years.

How to get there: There are daily direct flights from Southampton, Bournemouth and Brighton, but other locations need connecting flights, usually from Jersey. Travel to or from London takes five hours.

USP: This place is Miss Marple meets The Prisoner. There are no parking meters on the main street, the airport lounge has a box of unfinished knitting that locals toy with while waiting for flights, and the police Land Rover's number plate is 999.