“We just fell in love with it.”

They have restored the mill using local builders and materials — except Italian tiles. The old water tank is to be converted into a swimming pool, and they want to add a pergola to shade the terrace.

“People want somewhere to renovate where they can experience traditional village life,” says Oonagh Karanjia of Crete Property Consultants, which has more than 3,000 properties on its books.

“Five years ago, you could pick up a house that needed some work for just £16,000; now a complete ruin near Elounda starts at £40,000. A two-bedroom house in the area bought two years ago for £48,000 sold early this year for £70,000.”

Further inland there are plenty of run-down properties for less than £25,000 in hamlets that don’t appear in the guidebooks. Karanjia has a ruined stone house in Agios Antonios available for £18,000 and, up in the mountains near Anogia, a 45-minute drive to Iraklion, an 18th-century house with an original wine press, in need of complete renovation, for £45,600.

Prices in Crete have risen by 10% over the past 12 months, compared with 20%-30% the previous 12 months, according to Steve Riddiford, who set up Crete Connections in 2001.

Most of his clients want a holiday home, with 30% of those hoping to retire to Crete. He warns that a smaller house of 80sq m is fine for holidays, but if you want to live there then you will need at least 100sq m, as come the winter you’ll need to stay indoors.

One company offering a renovation service to discerning Brits in Rethymnon and Chania is The English Builder in Crete, whose Mike Scott says: “Be prepared to pay more than the asking price again if you are connecting to mains services, installing drainage and rebuilding in stone.”

Buying land or property in Crete needs to be approached with caution. George Verghetikias, a lawyer, explains: “You need to make sure that the vendor has the right to sell and that you are actually buying the house and not a false piece of paper.”

The buying process in Greece is straightforward. Buyers pay a 10% deposit and sign a pre-contract agreement that states the names of the buyer and seller, the title, the price and any conditions of the sale, and should be signed in front of a notary and the lawyers for both parties.

A lawyer should then carry out a search on the property and liaise with the local council to fix the “assessed value” (which is usually lower than the purchase price) and, once bought, register the sale at the land registry. Registration, purchase tax, notary and legal fees average 12% of the total sale. If you want to let your property you will need a rental licence.

Peter Knee from Worthing, West Sussex, bought a one-bed house less than 400 yards from the sea on his first visit to the island in 2001. A sports therapist, Peter and his wife, Linda, both in their early fifties, bought the house in Pahia Ammos for £27,500 and spent almost the same again building a second floor and adding a roof terrace. They have already visited 25 times, hiring a car for £100 a week.

“Some of the villages haven’t changed in the past 50 years,” says Peter. “Once a week in July and August all the villagers come out with food, wine and raki to share. There’s a traditional lyre player, lots of Greek music and dancing.”

They have picked up some conversational Greek, but Peter did get a bit stuck when he had to buy a lavatory cistern. “It’s not in most of the books,” he says. “Just in case you want to know, it’s kazanaki.”

The English Builder in Crete, www.englishbuilderincrete.com

On the Market

A two-bedroom flat in the Akamas block at Theseus Beach Village, on the coast near Iraklion, is on sale for £100,000 with Savills, 01202 765 011, www.savills.com. It has monthly service charges of £25

In Fres, a 30-minute drive from Chania, this property could become either a two- or three-bedroom house. It is on sale for £70,000 with Crete Connections, 07763 384 285, www.crete-connections.com

A 20-minute drive from Kalamaki Beach, this ruin in Metropoli could be restored to a three-bed home. On sale with Crete Property Consultants, 020 7328 8209, www.creteproperty.co.uk, for £33,500

In Kritsa, a large Byzantine village near Agios Nikolaos, this run-down property, priced at £18,500, has both mountain and sea views. Crete Property Consultants, 020 7328 8209, www.creteproperty.co.uk

Times recommends

• Second homes: credit crunch casualty or money-spinner?
• How I built my own sliding house
• Top 10 incentives for house buyers