There are few places more frozen in time than Nicosia’s UN-patrolled buffer zone. And in that space of barbed wire, sandbags and guard posts, there is no place that conjures division more than the Ledra Palace hotel.

What was once a magnet for Hollywood stars, the go-to establishment for Elizabeth Taylor and Richard Burton, famed as much for its ballroom as its invention of the brandy sour, has come to symbolise the failure of countless peace envoys, diplomats and politicians to reunite Europe’s last divided capital.

Its bullet and rocket-scarred facade, like its splintered chandeliers, are tokens of conflict, one so intractable that the island has remained split between Greeks and Turks since 1974.

Time has had its effect. The hotel that hosted Cyprus’s colonial-era rich – boasting luxurious en-suite bedrooms and a swimming pool whose opening became a high-society event – is now so structurally unsound that the UN peacekeepers garrisoned in the building for the past 45 years are having to call it a day.

This month the 4th Regiment Royal Artillery, the UK contingent currently supervising the ceasefire lines that bisect Nicosia, will move out, completing the year-long transfer to a new camp of container homes behind the hotel. It will be the end of an era for soldiers who have had to put up with broken pipes and blocked toilets in living facilities long deemed unsafe.

“On our WhatsApp group last night I was telling the guys all about the rat running underneath my floorboards,” said a regiment officer giving a tour of the dilapidated premises. “It’s a pity the palace has come to this.”

For many, the troops’ departure will be another sad marker of the inability to resolve a dispute that has festered since inter-ethnic fighting erupted in 1963, laying the ground for Turkish troops to invade and seize the island’s northern third following a coup by far-right sympathisers favouring union with Greece. But while the wild, weed-infested buffer zone evokes partition – sowing the seeds for mistrust along the 120-mile divide – the old enmity has begun to be replaced by something else. Where governments have failed, and politicians feared to go, citizens bent on reconciliation have moved in.

Facebook Twitter Pinterest Cypriot forces at the Ledra, which then became home to UN troops. British peacekeepers arrived in 1993. Photograph: Geoffrey White/ANL/Rex/Shutterstock

For those too young to have memories of coexistence, the demilitarised area, or “dead zone”, offers the neutrality needed to overcome segregation. “It has increasingly become a third space that supersedes the boundaries of nationalist discourse,” says Maria Hadjiplavou, a professor in conflict resolution who has been involved in peace-building work since the 1980s.

Nowhere is this more apparent than in the Home for Cooperation, the two-storey, bullet-pocked building opposite the hotel. Since opening in 2011 – eight years after Turkish Cypriot authorities eased inter-ethnic contact by opening the Ledra Palace checkpoint, until then the main crossing between south and north – the home has provided a sanctuary for those wanting to slay the mutual suspicion that has kept the communities apart. It is here that NGOs and citizens’ groups, academics, artists and musicians meet to discuss and develop reconciliation.

Few know this better than Marilena Spyrou and Hayriye Ruzgar. Each morning they make the same journey to the ceasefire lines that have divided Cyprus for longer than either has lived. Bonded by a yearning to see their country reunited, differences, they say, are forgotten in the dead zone. Spyrou may cross from a checkpoint in the south, Ruzgar may arrive from a checkpoint in the north, but when they meet in the buffer zone on the home’s first floor, facing each other from opposite sides of a desk, they are Cypriots first and foremost. “We are Cypriots who happen to speak Greek or Turkish,” says Spyrou, who was born 10 years after the invasion to Greek Cypriot refugees forced to flee the north. “A lot of my friends have never met a Turkish Cypriot. They’ll ask me things like, ‘Do they all wear headscarves?’ When they come here, they realise that almost everything they ever believed is untrue.”

This is the Cyprus I dream of, where people don’t care about religion, ethnicity or language, the things that divide us Esra Aygin, activist

At 27, Ruzgar, whose father was an army officer, acknowledges that not all her friends see things the same way, but insists: “Our generation aren’t bound by the problems of the past, we think of the future. Our island is too small to be divided.”

With talks to create a united federal Cyprus stalled since peace negotiations collapsed in Switzerland in 2017, those who want a solution say bi-communal contact is more important than ever. Although technology and social media have helped transcend barriers, lack of communication and interaction create the perfect breeding ground for the prejudice and fears projected by nationalist education systems on both sides.

“Being here, where there is no ‘us’ and ‘them,’ keeps my hopes alive, my faith in people alive. It is a common space that we are not allowed to have in the north or south,” says Esra Aygin, a prominent bi-communal peace activist sitting at a table on the terrace outside the home. “This is the Cyprus I dream of, where people don’t care about religion, ethnicity or language, the things that divide us, but look for the things that unite us.”

Reconciliation experts are in no doubt that increased contact has had a transformative effect, fostering tolerance and support for a settlement, even if unwavering pro-solutionists in the south are still in a minority.

“Empirical data demonstrates how positive contact is,” says Professor Nicos Trimikliniotis, who teaches sociology at the University of Nicosia. “Every year I make sure to come with students to the home so they can talk and engage with people from both sides. It’s worth more than a million lectures.” In November two more crossings opened, bringing the total number to nine alone the buffer zone.

Before 2003 most bi-communal exchange was conducted in the mixed village of Pyla, also under UN supervision, in the eastern part of the island. “Cyprus is not Palestine or Kashmir,” says Sener Elgil, who heads the Turkish Cypriot teachers’ trade union. “We are European people who can live together. It is a nonsense to have [mainland] Turkish troops here.”

Elgil, a leading light in the Bi-communal Peace Initiative, which represents 70 trade unions across the divide, fears that if a solution doesn’t come soon there’ll be no more Turkish Cypriots left. “So many are leaving, we’re going to become extinct,” he says, lamenting the influx of settlers from Turkey since the breakaway state, recognised only by Ankara, declared independence in 1983.

Like so many others who daily drop by the home, Christina Valanidou, a retired Greek Cypriot schoolteacher, fears that, without a formal peace, conflict could loom. Post-Trump, there has been growing speculation that the UN will not renew the mandate governing peacekeepers on the island. “As they say, Cyprus’s drama is that there is no drama,” she quips. “But if the UN does pull out, everything will change in the buffer zone. That may well focus minds in the search for the urgent solution that we all need.”

• This article was amended on 18 April 2019. An earlier version incorrectly stated that “the breakaway state declared independence in 1981”. That should have said 1983.