How to build a house...with 20 friends: Families across the country are turning to co-housing

Groups of families - put off by huge house prices- are joining together to build their own housing complexes from scratch

In a flat in Stoke Newington, north-east London, a group of six friends debate the logistics of moving into their new bespoke property nearby, now nearing its completion date. In the new development, six homes back on to a communal space. While the group will each live privately, they will share laundry, garden and social facilities when they move in. Today, their agenda includes checking the building work, rates and insurance, as one might expect with any brand-new property. Unusually, a collective office, library, exhibition space and even dog are also up for consideration.

The group's project, which completes in May after a five-year development process, is the first example of co-housing – private homes with communal areas – to finish in the capital. As London's house prices go ever upwards, and the country's housing shortage persists, those living in such developments are realistic about the associated, necessary compromises – but can be evangelical about their multiple financial, environmental and community benefits.

"I'd been looking for six months in this area for something I could afford, couldn't find anything, and that's when we were serendipitously introduced," says one of the group, Cressida Hubbard, a deputy director of a London arts organisation in her late forties. Other members of the group jumped at the opportunity "because we knew it was going to be much more affordable than buying a second-hand home".

There are now 14 built co-housing projects in Britain, with more than 40 groups also working up plans, according to the UK Cohousing Network, a support organisation which shares knowledge between groups such as this. Mostly, these are outside the capital, where land is cheaper. However, this new scheme, in the London Borough of Hackney, still provides an exemplar for how communities can think creatively about developing reasonably-priced, high-quality housing. That is, of course, if people are willing to work constructively with their neighbours.

In the case of the Hackney development, the group bought the land in 2009 from the Ethiopian Christian Fellowship Church, whose own proposals for the unused site had stalled. "We wrote a letter to the church saying we had a set of values that might be more in line with theirs than a private developer," says Hubbard. These values included a desire to "find a different way to be in London" in a fresh model for a more "socially interactive and responsible environment" according to Lily Markiewicz, an artist in her mid-fifties who will be living with Hubbard in the scheme. This will make it distinct from the area's usual self-contained Victorian terraces. After Hackney Council gave the group an informal indication it was likely to support their application, and the scheme was reduced in size to accommodate the wishes of neighbours, it won planning permission in 2011. Throughout the process the group has met weekly, its members making all decisions through consensus. They describe themselves "not as wealthy landowners, not as first-time buyers", rather those in need of less expensive alternatives to conventional owner-occupation. Each of them will be a leaseholder, have a stake in a landowning company, and some have helped each other financially – without formal contracts – along the way.

Touring their new development on a crisp spring day, it is easy to see its appeal. Clad in brick and timber, and architecturally sleek, residents first encounter the site via a long drive. The downstairs communal space, approximately the size of a small one-bedroom flat, is accessed via a long series of folding French windows. In this room, the group may meet to eat, relax, share office equipment, or catch up. Their private accommodation is reached via doors off this main room. Here, residents have self-contained units, which are arranged either side of the central space. Each unit is sensitively designed with its own bespoke features, and has its own garden. These are mutually accessible. There is also a shared terrace, on the floor above the communal downstairs area. "There are no private gardens and that goes a huge way to maximising the use of space," says Ken Rorrison, a director of the group's architect, Henley Halebrown Rorrison. "There are pockets of space where you can seek out privacy, but the group can walk around the whole site which they have just bought, which is incredibly rare in London."

The group's members are realistic about the difficulties of the development process. "If you come in with a very fixed idea of what you want, then you are going to struggle," says Hubbard. "Because the nature of the beast is that you keep having to give way and find an alternative way of getting there." Markiewicz, however, believes such travails are the premium for the social benefits. She says: "It's about intense human interaction. We will have shared responsibilities that will cause us delight and conflict. It's a system where we are forced to interact with each other beyond a superficial hello and goodbye."

According to the UK Cohousing Network, co-housing was begun by a group of 50 families in Denmark in the late 1960s, inspired by the notion that children are best raised in a closely-connected community environment. Now 5 per cent of that country's population lives in co-housing developments. In the early 1980s, two architects, Kathryn McCamant and Charles Durrett, spread the idea to the US, where there are now around 120 extant co-housing communities. Over in Britain, in 1980, 20 public-sector workers bought Thundercliffe Grange in Rotherham for under £100,000. They converted the former psychiatric hospital, housed in an 18th-century mansion house, into Britain's first co-housing project. Jo Davison, a journalist at the Sheffield Star, has lived there for 12 years.

"I think as a single parent, as I was, you can feel isolated in a community, but this was so different," she says. "It was giving my son a different kind of life and it all worked out well. I learnt things I never would have: bricklaying, concrete mixing, up ladders and painting ceilings. You learn as you go along. We're supportive, make decisions together and respect each other's views."

As in Hackney, residents share workshop and laundry facilities. According to Davison, two children of its original residents have now either bought back into the scheme or are in the process of buying units of their own.

Since then, a mixture of new-build and conversion projects have sprung up nationwide, from Lancaster to Stroud, Dorset to Sussex, catalysed by people's need to find cost-effective housing solutions to the economic crisis – and a more sociable way of living.

In Leeds, Lilac (Low Impact Living Affordable Community) completed last year. The project's organisers say it differs from other co-housing schemes in that its ethos is partly focused on affordability. Using a "mutual home ownership model", residents buy 10 per cent of the allocated value of their property – from a central legal entity – when they move in and then contribute 35 per cent of their net income every month. For a one-bedroom flat, the occupants must have a combined minimum annual income of £15,000 to participate. When people leave the development, the value of their share of their property is linked to local average earnings, not local house prices, in effect preventing people from speculating on homes in the scheme.

This project, with 20 units, is considerably bigger than the one in Hackney. When I visit in March, the site is entered through an entire "common house" – a two-storey, shared, communal unit – where three times a week residents meet for communal meals, more rarely playing board games, attending music evenings or watching television. Next to it are the shared laundry facilities. The scheme's homes are blocks of prefabricated housing made from hay bales coated with lime render. They surround a sustainable central water feature. There are allotments also used by outside local residents, and picnic tables. The cedar-wood finish on the homes' balconies and edges gives the development a welcoming, rustic feel.

Paul Chatterton, a Lilac resident and academic at the University of Leeds, says the design's excellent insulation and solar power gives him an 80 per cent reduction in his annual energy bills. He emphasises that he is "evangelical" about how the scheme's model can be replicated. "There's a huge demand for this kind of product in Britain," he says. "But there is a dysfunctional supply. The housing market is not building this kind of housing because the volume house-builders can't see it turning a profit for them. Community-led developments and self-builders will need to meet that demand and hopefully the volume builders will change the way they operate." He is critical of land-banking – the wholesale aggregation of land to turn a profit – and passionate about the marriage of mutualism to co-housing. Given the house price bubble, his suggestion for London is "retrofitted co-housing" where neighbours could knock down fences to share gardens, or buy up properties to be used as a common house for an entire road. "It would be transformative," he concludes.

However, while in the North of England urban land prices rose 0.1 per cent in 2013, in the capital they increased by 13.2 per cent over the same period. Back in Hackney, house prices rose 20 per cent in the year preceding January 2014, according to Land Registry figures, the highest of anywhere in the capital. This comes at a time when the borough is facing a critical shortfall of new affordable homes. In London, the cost of new-build communality is high, and is much less cost effective in the short term than elsewhere, even if the units go up with local property values.

The group in Stoke Newington says that given the costs involved, and the fact that these developments are not space intensive, means there are problems with replicating their model in affordable housing. "There is so little land," says Hubbard. "And the land that is free is usually problematic. In London this is always going to be done on an idiosyncratic basis." Another member of the group adds: "There might be one or two other co-housing groups trying this in London, but we are pretty much unique. We were incredibly lucky. There should be many more people empowered to do this."

Simon Henley, who worked with Rorrison on the project, is more positive. He says: "A spare room adds a fifth more space to a conventional one- or two-bedroom home. If you built co-homes which shared spare bedrooms, instead of separate properties, the capital could see thousands of extra homes on the same amount of land for the same money."

On a wider scale, the benefits of communal living for the elderly are significant, with mental-health charities highlighting isolation as a risk factor for those suffering from depression and dementia.

As I leave the co-housing meeting, the future neighbours agree the final items on their agenda. It has been another evening of ironing out details, settling differences, negotiations most neighbours will never manage face-to-face. Here, residents will be forced to interact by the very blueprint of their environment. The associated benefits of this are clear. And finally, after much hard work, they are now ready to move in. "We're exhausted," concludes Hubbard. "It has been a long process. We are moving in with the same awareness of the struggles and contradictions, but also the positive aspects of this kind of project. It's not a euphoria. You don't do this kind of project if you want your ideal home. This is about compromise, and learning to work with other people".