Half an hour by train from Amsterdam is a vision of a new Britain. On polder land reclaimed from the Zuiderzee lies Europe's biggest experiment in affordable self-build homes. Enthusiasts call it a model of sustainable development, a Grand Designs for the average man. Critics call it an ersatz city, a soulless architectural Legoland. But this week housing minister Grant Shapps declared Almere a "genuinely workable model" as he made self-build a major plank in the government's strategy for solving Britain's housing crisis.

Last year only one in 10 new homes in Britain was self-built. Plots are difficult to find, and finance and mortgage products restricted, while regulations and planning permissions are onerous. Faced with bureaucratic hurdles and frustrations, many potential self-builders abandon projects, sometimes after months of planning.

But outside the UK, self-build is flourishing. In Belgium, which like the UK is densely populated and heavily urbanised, more than six in 10 homes are self-built. In the Netherlands the figure is three in 10.

This week the government set out a vision in which an extra 100,000 self-build homes – it uses the phrase "custom-build" housing – will go up over the next decade in England alone. It wants to "kickstart a revolution" in which local authorities will for the first time be required to take self-build seriously, release publicly owned land to self-builders, and give government support to those taking the first step in building their own futures. For now, it is making £30m available as short-term project finance, and in March next year will unveil a formal action plan to turn the vision into reality.

Almere

The Homeruskwartier district in Almere, a city with a population of 180,000, is the first self-build project attempted on a truly large scale. Since 2006, self-builders have erected 800 homes, and thousands more are on the way. The local authority draws up the street plan, then makes the plots available at standard commercial cost. Local people, freed from any further planning restrictions, can then design and build whatever takes their fancy.

Jacqueline Tellinga, one of the driving forces behind the project, describes it as a return to the past. "Take a look at the buildings along the canals of Amsterdam. They did the same as we are trying to do. The plots were parcelled out, the buyers were given a few guidelines over things such as height, but after that it was left to the individual."

Almere

Building costs in Almere vary depending on how much the buyers do themselves, but she says they average from €800 per sq m to €1,800. That's around £72,000-£160,000 for someone wanting the same sort of floorspace as the typical British three-bed semi (around 105 sq m).

Keeping homes affordable is key to the Homeruskwartier project, which means creating plots for self-build flats as well as houses. Tellinga cites one group of 25 individuals who built a block of flats. Including the plot and building, the cost of each flat was just £69,000, without any subsidy. Cutting out the developer's profit – and those expensive marketing suites – saves a small fortune.

Almere Photograph: Martijn Steiner Lovisa

But self-build is not just about money. "What I like most is the way people develop their curiosity and skills – they bring ideas and test construction techniques more than any developer would. We don't insist on sustainability requirements, but it's amazing how much people just do it themselves," says Tellinga.

In Britain, the hurdles to a self-build revolution remain high. More than 80,000 people are registered on Buildstore's website looking for UK plots. There are virtually no ready-assembled sites such as Almere. Self-build lending is seen as more risky than conventional mortgages (several banks pulled out last year), and lending against larger community schemes is non-existent.

Building standards and codes are complex and expensive. "The number of planning conditions placed on domestic building work has grown inexorably over the years, and there is often very little difference between conditions placed on a single house and those placed on an estate of 100 homes," said a report from Nasba, the National Self Build Association, in July.

Deon Lombard, an architect from Twickenham, is sceptical that the Dutch approach will work in Britain because of the "stranglehold, inherent conservatism and lack of vision in the British planning system".

His own repeated attempts at self-build have fallen foul of Richmond upon Thames planners and the Planning Inspectorate, leaving his plot of land, purchased in 2001 in the hope of building a family home, lying fallow.

"The planning system in Britain is reactionary, incredibly tortuous and open to a wide range of interpretation. My experience of submitting planning applications, both for myself and clients, is that it comes down to the subjective views and prejudices of individual planning officers and inspectors, who can turn down applications using vague criteria such as 'unneighbourly development' or 'impact on amenity'."

Yet there are examples of successful self-build in Britain, even within large towns and cities. In Ashley Vale in Bristol, an action group succeeded against the odds (although this was in 2001) to self-build 26 detached and semi-detached homes, at a typical cost (including plot purchase) of £110,000. Six further flats were completed last year, which won a CABE Building for Life Award.

Jackson Moulding, who helped set up Ashley Vale, is a passionate supporter of self-build, but acknowledges the challenges. "The price of land has been bid up by developers who hold it in land banks. They are building for buy-to-let landlords who are charging tenants huge amounts. People are being left stuck with high rents and no control." Still, he is hopeful the new strategy will begin to unblock council attitudes, and encourages anyone interested in building their own home as part of a group or community to visit communitybuild.org.uk.

But the major construction companies are less enthusiastic. A spokesman for the Home Builders Federation said "everyone likes the idea of self-build", but it probably won't make a big contribution to supply in the next few years.

Grand Designs, which regularly draws four million viewers, may be part of the problem. "It can sometimes present a rather skewed impression of the industry," says Nasba. "In reality, most self-build homes are very modest and look just like every other house."

Above all, self-builders save money: the average self-build house in the UK costs only 59% of its final value, as self-builders cut out the developer's profit.