A chandelier sends rainbows flaring across the bare brick walls of the Granby Winter Garden, a Turner Prize-winning indoor green space created inside two terraced houses in a semi-derelict neighbourhood of Liverpool. After years of residents staring out at unlit windows, the chandelier gives off a glint of hope.

As the crowd of pensioners, teenagers, and everyone in between, squeezes itself into every corner of the room, it’s hard to imagine that only two decades ago, Granby Street was plagued by feral cats and fly tippers. The area never recovered from the experience of what the authorities call the Toxteth Riots – a stand-off between police and young people in July 1981 that resulted in the destruction of some 70 buildings. “Basically, this would be a twilight zone and they [the council] wouldn’t do anything,” recalls Hazel Tilley, 64, who moved to the area at the time, against the advice of many friends.

In the 1990s, Tilley and other residents organised themselves to resist Granby’s demolition. After that threat receded in 2011, the residents established a community land trust, a model first used by civil rights activists in the United States to provide economic independence for African-Americans in the Deep South. Though CLTs had become a fixture of American housing by the 1990s, they only really took root in England after the financial crisis – a third of councils now support some form of community-led housing.

CLTs aren’t the only non-profit housing ownership model around. But what sets them apart is that land is owned and managed by the community themselves. Granby4Streets, a CLT established in 2013, will admit anyone who lives or works in the L8 postcode of the city if they buy a share for a pound. Members elect a board, who in turn elects a chair, and everyone is invited to an annual general meeting. Other CLTs may organise members differently, but the principle of common ownership is the same.

Compared to London, where CLT members search for underused land in an overpriced landscape, the focus in Liverpool is on restoration and rejuvenation. Granby4Streets is currently renovating 11 houses; roughly half will be let at a social rent, which is pegged to local incomes and remains lower than “affordable” rents – a definition that has been hotly contested in recent years.

Granby Winter Garden is only the latest milestone in a Scouse experiment with grassroots regeneration, and it’s possible to glimpse “Granbynomics” in action once a month, when residents close off a road and hold a market. Women in hijabs sell cheesecake pots and families queue for arancini before wandering down to watch a hip-hop singer, or eating their lunch on one of the brightly-coloured benches that line the side streets.

“When I moved into this street there were only 13 other households,” stallholder Ruth Joseph, 45, tells me. “When other people moved in you could see all these other lights, we hadn’t seen them before. It was crazy to have neighbours.” Granby4Streets’ next project is to refurbish the shuttered shop fronts opposite Joseph’s stall.

Other communities are hoping to replicate Granby’s renaissance. In Anfield, residents have created the CLT Homebaked, which rescued a much-loved bakery and renovated the boarded-up houses around it. The idea is spreading. According to recent figures, half of the 290 CLTs in England were created in the past two years alone.

There is more than one regeneration movement transforming Liverpool. The other is one of glass towers, concierges, and private gyms. Of 70 ongoing developments, according to Liverpool Council’s latest regeneration report, many are aimed at students, private renters, or tourists – Welsh Streets, another Toxteth area of terraced houses, has been saved and refurbished, but rent begins at more than £700 a month.

Liverpool Council, cash-strapped and caught in the middle, has sought a compromise by establishing its own housing company. It targets deprived areas and reinvests profits in its schemes. Granby4Streets has also relied on the help of the council, as well as the former deputy mayor, Ann O’Byrne. “We need a change from this top-down patriarchy approach to delivering public services to this community way of delivering,” O'Byrne says.

Tilly agrees. “Women are used to breaking things up and doing lots of tiny services,” she says, of the mostly female Granby leadership. “It started in lots of tiny ways and lots of practical ways. You are stepping into a street full of fly tipping, so you sweep up.” As for the feral cats, they were neutered.

It was this step-by-step approach, she says, that persuaded the authorities to trust residents. Before Granby's housing renovations, there was the market and the plant pots on the street. “It gave us the ability to say ‘we are using this space and it is morally ours.’”

A gradual approach takes time. Meanwhile, the developers’ cranes are rising above Liverpool. But in an age where the most potent slogan is “take back control”, Granby shows what can happen when authorities trust a community. “One of the things I noticed all the way through was the council presented big plans – total demolition of an area and total new build,” Tilley recalls. “But places fall apart a bit at a time. Decay by its very nature crumbles away. The putting together of this area had to follow the same pattern.”