My place or yours?

Peter and Maureen, a middle-aged, married couple, could be mistaken for the proud owners of a loft-style live/ work space. Milky, winter light from a picture window bathes their expansive living area that strikes a balance between cosiness and efficiency. A big mirror, set amid a swirl of fairy lights, reflects a patch of bright carpet, an assortment of sofas and an impressive-looking home-office in the far corner of the room. But the couple's lounge is the former cocktail bar of the Eagle and Child, an east-London pub facing demolition. And Peter and Maureen only got on to the property ladder by climbing through a window. They are squatters, members of a movement whose time may have come again.

While many believe that the 1994 Criminal Justice and Public Order Act delivered a fatal blow to squatters travellers, and ravers, this is not the case. The price of property and rents, a dearth of social housing and the abundance of empty homes in Britain today have created fertile ground for squatting. The number of squatters in England and Wales has risen by 60 per cent since 1995, according to the Advisory Service for Squatters (ASS), the best source of such estimates, from 9,500 people to around 15,000. The voluntary group, which helps squatters fight their cases in court, says its phones have not been so busy since the squatting peak of the late 1970s.

Stefan, 29, a lighting rigger who is frequently described as a "posh squatter", describes the process by which he finds sound housing "investments". "You watch a building for at least a couple of weeks to make sure no one's going there," he says. "You check its bin every couple of days to see if things are being thrown out. You check its post: if there's loads of mail, you get the obvious idea. You can check with the Land Registry who owns it."

Then you spread the word. "You check it out, you get a crew. You tell people: `We're doing a building tonight, lads - lads and ladies.' You get your flasks of tea in, you get pillows - and my electric screwdriver is in my bag"

"Once you get in the building you can't turn the lights on. You need to change the locks so that the keys and entry to the property are in your possession, and you put a `section six' [a legal warning that begins: `Take notice that we live in this property, it is our home and we intend to stay here'] in the window. As soon as you've secured it and have a section six in the window, you can turn the lights on. I can change a lock in about two minutes."

Popular conceptions notwithstanding, the act did not criminalise squatting. It remains a civil offence, and its provisions are rarely used against squatters. One of the advisers at the ASS, Jim, calls the legislation "a damp squib. It did a lot of legislating against things that never happened except on the pages of scurrilous newspapers, such as people going around the corner for a packet of fags and finding their house had been squatted."

But the face of squatting has changed in the past 10 years: increasingly often, it is European. A fair proportion of the 10,000 squatters in London - itself 80 to 90 per cent of the British total - have hunkered down at Marlowe House, in Lewisham, in the south-east of the capital. Around 350 people squat 93 flats in these two medium-rise, brown, tower blocks, which the council is itching to demolish. Only a fraction of the squatters who have filled the blocks over the past year have been British; Spaniards, Italians, French and Japanese live in these towers, but the great majority are Polish. There is even a Polish website exhorting people from the new EU country to come to the blocks.

"Squatting really saved my life in London," says one of the Poles, Lukas Gargala, 28, a part-time nurse. He was pedalling from Berlin to Hanover to visit some German relatives late in 2001, when, somewhere en route, the Û600 in savings that represented most of his worldly riches at the time slipped from his money-belt. He fetched up in his ultimate destination, London, where, with barely a converted penny to his name, he enrolled on an IT course.

Squatter friends in the capital put him up for a few days before pointing him in the direction of some squattable flats on a nearby estate. He moved into one of them and, rapidly convinced of the virtues of squatting, barely looked at the rental world. He did board once, but found himself paying pounds 400 a month for a tiny attic room to which his landlord would not tolerate visitors.

He says he will probably continue squatting while he takes a medical degree. For him, and for most of his compatriots in the flats, he says, squatting is "a necessity. Who arrives here with a great house, a great job? Nobody."

Nadia, 26, is a teaching assistant who shares a cosy, pin-neat flat with a fine view of the Thames with her brother, a few doors down from Lukas. She could afford to rent, she says, even on a salary of less than pounds 15,000 - her colleagues do - but it would leave her unable to save any money. An academic interest led her to squatting - she made a film about it as part of her anthropology degree - but it's pragmatism that has kept her there. Born in Iraq and raised in Scotland, she is now putting money aside to move to Syria. One drawback of squatting is having to move every six months or so, but even that "keeps things interesting".

The most obvious solution to accommodating people on low incomes is to provide them with affordable social housing. But local-authority flats and houses continue to decline in quantity and quality. The latest figures show the shortage to be so pressing that Tony Blair, to avoid further diminishing the stock, has just been forced to abandon his plan to let housing association tenants buy up their homes. John Prescott has pledged to step up social-housing construction by 50 per cent (providing 10,000 new homes a year) but, even if he delivers, there would still be at least 100,000 households - the latest homelessness count - queuing up for them.

Housing inflation in Britain has become so astronomical that a report by the charity Shelter recently described the inequality of wealth as Victorian. Given the circumstances, one might think that houses would not be left vacant. Yet there are 750,000 empty dwellings around the country, 3.4 per cent of the housing stock. Even in London, with its ferocious market, 3.2 per cent of houses are vacant - many due to property speculation.

The opportunity to squat endures, along with the need, but the style of squatting has changed. Mass squats, such as the condemned tower blocks Lukas and Nadia inhabit, are now the exception. David Watkinson, a barrister who has acted in squatting cases for 30 years, says that, in the 1970s and 1980s, squatters would typically occupy "whole streets of houses or parts of estates left empty because of stalled development programmes. Now they mainly occupy individual houses or flats, large-scale redevelopment having become a thing of the past."

Squatting is also becoming more entrenched beyond London, according to the ASS. In the past few years, the agency has seen a pronounced increase in requests for help from squatters outside the capital. Simon, Jon and Val - a computer technician, a website designer and a counsellor, all in their mid-30s - squat a former nursery, opposite Birmingham University, which lay unused for several years. They say that they enjoy the spacious rooms and generous garden - they could never afford to rent such a large house - but that there is a political purpose to the squat, as well. They want to set an example of "DIY housing" to the homeless people of Birmingham - whose numbers, in line with a national trend, have doubled in the past year - and have enlisted the mainly sympathetic local media to this end.

Squatters and the Government agree that, given mounting homelessness and an ever-more-exclusive property market, empty homes are, as a select committee report puts it, "at best a waste of resources, and at worst a blight on the lives of individuals and whole communities". Unfortunately, at this point the two sides' views diverge. A communique from John Prescott's office dismisses squatters - along with the "fly-tipping, graffiti, vandalism, drug-dealing [and] arson" that vacant homes attract - as part of the problem.

But squatters believe that they are part of the solution. They say they have lessons to teach the masses hauling themselves up the property ladder. With their typically numerous households, they argue, they set an example of communal living in a world of increasingly scarce resources. They recycle not only property but also most of what they furnish it with: skips are the Ikea of the squatting fraternity. Instead of exorbitant rents and mortgages, they propose "sweat equity": maintenance and renovation.

"People think squatting's an easy lifestyle," says Peter, in the sprawling former saloon bar of the Eagle and Child. "Well, it isn't - because you don't move into a place where someone's just gone on holiday for a couple of weeks. They are places that people have abandoned or that are up for demolition in six months or a year. You've got to fix plumbing, wiring, the floors; sometimes there are holes in the roof. If you're going to live there you've got to be able to put it right. It's exciting: driving somewhere, getting in, setting up - and then it's just like normal life."