A century ago the predecessor to today’s Nationwide building society was instrumental in building Letchworth, the first of Britain’s garden cities. Now the mutual society is going back to the future and is to start building homes again for the first time in a hundred years, in a revolutionary not-for-profit venture challenging the major housebuilders’ grip on the property market.

The society is starting small. The project, called Oakfield, close to Nationwide’s headquarters in Swindon, Wiltshire, is for 239 homes, making it a new neighbourhood, not a new town. It is aiming to build better – and bigger – homes as it has to cover just its costs, not squeeze out the 20%-plus margins that the big housebuilders usually expect.

“Profit is not our driving factor. The value in this project will be in replicating it across the country. The lovely thing about this is that we’re just trying to do the right thing, not just follow what developers have done before,” says Nick Spittal, general manager.

In the first half of the 20th century, Britain’s building societies weren’t just lenders but developers, behind some of the biggest housing ventures ever constructed. But after the second world war the societies focused on lending rather than building – until now.

“Housing is what Nationwide is about, and rather than lecture others and moan, we have begun looking at ways in which we could have a positive impact. Swindon is our home town and a good place to start,” says Tanya Joseph, head of communications at the society.

Unlike the big housebuilders, Nationwide deliberately did not begin with a land purchase, cookie-cutter construction plans and a faux “consultation” process. Instead, it hired Keith Brown, a community organiser, to knock on doors in a predominantly working-class part of Swindon and ask what people want from a home. Some of the answers were perhaps not what metropolitan planners might like to hear.

Letchworth, Britain’s first garden city, was built with the help of a predecessor of Nationwide building society. Photograph: Chronicle/Alamy Stock Photo/Alamy

Parking came top. Swindon is a town built around the car, and its residents, especially in its further suburban areas, aren’t about to ditch their cars for bicycles. So Nationwide’s new development, while making a nod towards cycling routes, will contain just over 1.7 car parking spaces for each dwelling.

Large garages are also high on the list. Why, local people asked, are garages so small that you can barely open a newer car’s door? So Nationwide is building garages wide enough to contain a Ford Focus with both doors open on both sides.

Next came ceiling heights. People told Brown they are fed up with modern homes having such low ceilings. It turns out that people can cope with relatively small room sizes but say low ceilings make for unliveable boxes. So Nationwide is building homes where rooms on the ground floor will have nearly one foot of extra ceiling height.

The residents are not so car-mad that they want their estates to become rat-runs. They are keen on Dutch-style “shared space” roads without raised pavements, aimed at discouraging cars from speeding.

Big gardens and high fences are also out. Nationwide is planning communal gardens for some of its terraced housing, with owners and renters having small patios and a large shared garden area for the community to use at it wishes.

Much of the savings from having to produce a profit will go into the development of the “public realm”. Central to the development is a parkland area that connects Oakfield with other parts of Swindon – so no one feels that it is a gated community for the well-off – and, crucially, a space for dogs. Dog walking was another thing that Swindon residents had high on their list.

Engaging with the local community has paid off. The Oakfield project, though it touches existing developments and allotments on nearly all sides, has not received a single objection during the planning process. Final permission has not yet been granted, but Swindon council is expected to give the go-ahead soon, with the first homes ready in 2021-22.

But what price for this community of tomorrow? Car spaces, wide garages, high ceilings and a big public realm don’t come cheap. Nationwide says it is a long way from finalising prices, but expects the range to be in the order of £200,000-£350,000, with homes ranging from cottages for older people to four-bed terraced family homes. That may be relatively cheap compared with much of the south-east of England, but is on a par with similar-sized homes in the town.

About 30% of the development will be affordable housing – a much higher percentage than typical new-build estates – with rental and shared-ownership options through a housing association.

Nationwide, while taking on the £50m financial risk of the development, isn’t about to launch its own building firm. Instead it will subcontract, but with a focus on local builders and apprentices. It hasn’t yet named who will build Oakfield, but it won’t be one of the giants such as Persimmon or Taylor Wimpey.

Igloo Regeneration is Nationwide’s partner in designing the new community. In a neat piece of social engineering, it is trying to change the perception that low-rise one- and two-bed blocks of flats are where you stick old people. On each floor of Oakfield’s only apartment block there will be three flats – and Nationwide is insisting that one on each floor goes to an elderly couple, one to a younger couple, and one to someone needing wheelchair access.

John Long, development director of Nationwide’s design partner, Igloo, says: “It’s deliberately inclusive. Had a normal developer gone for this site, it would have wanted a 10%-20% profit margin. Working with Nationwide, we’ve done it as a breakeven scheme, which means we had a much bigger budget for design and quality.”

But while Oakfield harks back to Bourneville or Port Sunlight, towns built by companies for their workers, Nationwide won’t be giving preferential terms for the thousands of people it employs in Swindon. This is not Nationwide-ville – and homebuyers won’t have to take out a Nationwide mortgage.

The building society knows the experiment will be watched closely. “We are not just going to walk away from this after it’s built.If it looks terrible in 10 years’ time, it will reflect badly on us.” It wants to share its learnings with other building societies, and with companies that might be able to use their balance sheets to fund developments for their workers struggling to get on the housing ladder. “ We want to create a blueprint that others can follow, to show the quality you can get if you forgo some of the profit.”