Imagine a world where homes were built according to the needs of residents rather than the profits of house builders, a place where land was allocated with the best long-term value in mind, rather than flogged off to the highest bidder, and where politicians’ claims of “creating communities” actually rang true.

It might be something like Marmalade Lane in Cambridge, where some innocuous-looking rows of pitch-roofed brick homes represent the quietly radical result of the city’s first co-housing development, almost 20 years in the making.

Look closely and you’ll see signs that this is no ordinary developer-driven estate. Where you might usually find parked cars is instead an open, pedestrianised lane where kids’ chalk doodles cover the tarmac, along with a Swingball pole and football goalposts, emphatically claiming the street as a place for play. The back doors of one side of the lane face the front doors of the other – a sinful breach of privacy in any planners’ textbook, while a large swath into which you would have expected more houses to have been squeezed has been left as grassy open space. These are subtle things, but they make it feel like a place where the neighbours might know and like each other, rather than wanting to retreat behind ever higher fences.

Shared space … the common house. Photograph: David Butler

“You either love or you hate co-housing,” says resident Jan Chadwick, 66, as she flicks through the community’s various working-group agendas on her phone, covering everything from cooking rotas to gardening duties. “With one daughter, and no desire to become dependent elderly parents, my husband and I saw it as a potential solution to ensure we stayed interested, lively and engaged in our community, now and during our twilight years.”

She is sitting in the common house, where an airy double-height dining room gives on to a cosy seating area around a fireplace, and large hatch leads to a fully-equipped catering kitchen, where the day’s vegan lunch is being prepared. It has the air of a lively hostel common room, with children zooming in and out through the patio doors while others scamper upstairs to the yoga and ping pong rooms.

This oasis of 42 homes is something of an anomaly, standing in marked contrast to the conventional suburban streets of the Orchard Park estate around it, where drab blocks encircle cul-de-sacs of cars. This site would have ended suffering a similar fate, were it not for the 2008 financial crisis.

‘It’s a community, not a commune’ … neighbouring families at Marmalade Lane. Photograph: David Butler

“It’s probably the only occasion when I’ll say thank goodness for the crisis,” says Cambridge city councillor Rod Cantrill. “The developers walked away from the site, so we had the opportunity to consider an alternative path.” A co-housing group had formed in Cambridge around 2000, but faced the usual obstacle of finding a site. The council, meanwhile, couldn’t attract a developer for their leftover plot. With the help of community housing consultants Stephen Hill and Adam Broadway, the council took the bold step of allocating the site for co-housing, securing funding from the former Homes and Communities Agency to develop a lengthy brief with the K1 co-housing group.

“We had originally imagined a self-build project,” says Cantrill, “but the economics couldn’t work for the council, because the residents would spend all their savings on buying the land. We needed the equity to come from an established development partner.” Following a tender process in 2014, developer Town was selected with Scandinavian eco-house builder Trivselhus and Cambridge-based architects Mole, who then worked with the residents to customise their vision for the site.

The whole site is essentially a collective playground for kids.

“In effect we had 42 different houses to design,” says architect Meredith Bowles, “so we had to find ways of making them more replicable and cost-effective to build.” The architects developed three different house types, which could then be configured with up to 27 different internal layouts, allowing for more open-plan or compartmentalised living arrangements, and a choice of four brick types. The result creates a subtle a sense of individuality within a coherent whole, with paired flats jumbled up with five-bed family homes, all designed to low-energy standards, with the timber frames precision-manufactured in Sweden. All windows are triple-glazed, while heating is provided by air-source heat pumps – which sadly sit outside each house in rather clumsy boxes.

“It’s a very straightforward scheme,” says Bowles, “but with an attitude to private and public space that’s different to most places in Britain. The whole site is essentially a collective playground for kids.” Informed by study trips to Denmark and the Netherlands, the architects banished cars to a corner of the site, devoted the central lane to pedestrians and reduced individual backyards to make room for the big common garden. It all follows the accepted co-housing wisdom that resources are better when they’re pooled. Along with the big kitchen, there’s a communal laundry, gym and workshop, as well as three guest bedrooms above the common house, but homes have their own kitchens and washing machine points too – this isn’t quite the full Soviet Kommunalka yet. “It’s a community, not a commune,” one resident is keen to emphasise.

‘Support network on hand’ … Hester Wells, Dave Barker and their nine-month-old twins. Photograph: David Butler

Counting 14 different nationalities in their number, with ages ranging from nine months to 73 years, the group is an eclectic bunch, attracted for a variety of reasons. Like other co-housing communities have found, there are clear benefits to multigenerational living, from sharing childcare to combating isolation.

“We didn’t know anything about co-housing,” says Dave Barker, who moved here with his partner, Hester Wells, and their newborn twins. “We came across the group at a property fair and it seemed like an attractive alternative to the usual ‘Have kids and lose all your friends’ model.” As new parents, the couple have found the friends-on-tap nature of the community a boon. “I’m mostly on my own with the kids in the daytime,” says Wells, “so it’s great to feel like there’s a support network on hand. There’s always someone around to have a cup of tea with.”

With prices ranging from £195,000 for a one-bed apartment to £530,000 for a five-bed house, the homes are not cheap, but they are a good deal less than the equivalent new developments nearby, such as at the university-developed suburb of Eddington, where prices are almost double. One downside, for a project purporting to be for a truly mixed community, is the lack of affordable housing. The plot had been earmarked for market-sale homes, as part of the wider Orchard Park development, that included 40% affordable housing in total, but it was left over when the house builders walked away in 2008. Neil Murphy, of developer Town, insists that Marmalade Lane would still have been viable if a proportion of affordable housing had been required by the council, as the obligation would have been reflected in the price of the land.

For the council – still reeling from criticism of the recent Station Square development, roundly condemned as an “embarrassment to the city” – the lesson has been about the importance of letting residents have meaningful involvement in the plans.

Embarrassment … Station Square, Cambridge. Photograph: Oliver Wainwright/The Guardian

“One of the biggest challenges for the last two decades has been how to deliver proper communities,” says Cantrill. “We’re building 5,000 homes on the southern fringe of the city, but are they communities? We’ve built a community centre there, but it’s not something that appears overnight.”

For all its anomalous nature, as the product of the right people being in the right place at the right time to seize the opportunity of a collapsing housing market, Marmalade Lane is a model of people-centred development. But it shouldn’t take two decades of community planning and a financial crisis for a project like this to happen.