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Durham University's new student housing is not one of the in-crowd of contemporary student residences. It is neither a large slab block, nor a continuous strip, nor a doughnut enclosing a courtyard, all of which have become the norm for student residences.

Instead, Durham has built its students a cluster of free-standing villas on an open hillside meadow. The first phase of eight villas, together with a small amenity building, has been completed and occupied. If and when the entire scheme of 21 villas and a more substantial amenity building are developed, they should coalesce into something akin to a medieval Tuscan hill village, complete with vertical towers.

This architectural form is Arup Associates' response to a special site. Although it lies just beyond existing university residences and only a mile and a half from Durham's magnificent cathedral, the site is literally green field. Formerly part of Howlands Farm, the fields lie towards the brow of a gentle hill, facing south-west towards the sun and a delicious view of rolling hills, woods, fields and hedgerows.

The site had justifiably been designated by city planners as an area of great landscape value. The university therefore took it upon itself "to create something special in this special place".

In 1994, it launched an open, two-stage competition organised on full RIBA lines.

The competition brief evoked a vision of a "scholastic village" where people of different ages and backgrounds could come and go, some resident, some transient and some with families. It also called for buildings that would have "minimal visual impact on the landscape". On top of that, it asked for a green solution that would avoid moving any spoil from the site and would meet an ambitiously low energy-consumption target.

Such a wide-ranging competition brief put the multidisciplinary Arup Associates in its element. The practice's submission singled out the natural landscape as "the key to the plan". With this principle in mind, the practice was bold enough to part company with a suggestion in the brief that the buildings could be tucked away along the lower slopes of the hill. Quite the reverse: Arup Associates grouped its villas towards the crest of the hill, where they would benefit from the best views. Even more boldly, the practice designed each villa around a high central wind tower that would naturally ventilate the accommodation below. And to cap it all, Arup decided to increase the height of the hill by building up a mound of spoil at the crest, where it would act as a focus and backdrop to the new village. As the spoil from new infrastructure could not be removed from the site, this option was preferred to filling in the slopes that gave the site its special character.

The other aspect of Arup's competition entry that appealed to the assessors, according to Peter McEwen, the university estates officer, was an offer of design collaboration. "Arup were the only people who put in a concept of green buildings, energy management and village life that would evolve in collaboration with the university. The others came up with preconceived buildings."

Arup's commitment to collaboration has proved its worth, as the scheme was subjected to three years of design development after the practice was appointed. The university faced difficulties in raising funding, and this resulted in the brief being radically changed. The challenge to Arup was then to adapt its design to meet the new brief without undermining its original concept.

The original brief was for a mix of undergraduate and postgraduate accommodation that had different requirements. The undergraduates would be catered for centrally in the amenity building, whereas postgraduates would be expected to cook for themselves in a substantial shared kitchen that was to be provided in each flat. Another difference was that, if they were fitted with en-suite showers and toilets, the undergraduate bedrooms could serve the conference trade during the 24 weeks of holiday in the academic year, whereas en-suite showers were deemed unnecessary in the postgraduate accommodation, as they remained occupied for 46 weeks a year and could not be used to house conference delegates. Accordingly, Arup Associates designed three villa types, one with en-suite shower rooms for undergraduates, and two with shared kitchens for postgraduates.

Last year, the first phase was eventually completed, comprising eight villas with a total of 196 study bedrooms, plus a small amenity building temporarily converted out of an old brick barn. The other main change from the original brief is that the dwellings have been built exclusively for postgraduates, so two of the three villa types were amended to provide shared kitchens.

Although amounting to only one-third of the entire scheme, the completed first phase of eight villas is just large enough to cohere as a hamlet, if not quite a full village. Although free-standing, the villas huddle together near the hilltop and enclose two intimate pockets of space, which are landscaped in grass and shrubs as if they were natural extensions of the surrounding wild-flower meadows. Access to the villas is by narrow footpaths, as all car parking has been corralled near the entrance to the site.

The three-storey buildings have the gritty, no-frills character of a northern mill village. Low double-pitched roofs, repetitive rectangular windows and a complete lack of projecting eaves or window ledges make the basic building forms crisp and compact. Multicoloured brickwork in reds, russets and dark blues laid with rough-finished flush pointing add to their solid northern industrial character or, in Arup Associates' analogy, "low-lying, solidly built crofts". The brickwork is matched by flush lintels and sills in precast concrete with exposed aggregate.

The sculptural quality comes from the way these basic forms are grouped together, encircling and stepping down the hilltop in three loose necklaces. In addition, all three house types are slightly cranked to follow the curving contours.

More precisely, each type has been ingeniously designed in the shape of a hinge, that is, with two wings of bedrooms projecting from a knuckle containing entrance and stairs. The hinge can be slightly opened or shut by varying the obtuse angle between the two wings, and at the same time the relative levels of the two wings can be stepped up or down in height. These capabilities, together with some judicious excavation, were combined to keep the buildings "low and snug to the contours".

Two architectural elements stand out from these homogeneous forms. The first is a double-height window wall that encloses each stairwell on its south side. The second is that one of the villas erupts in an extraordinary wind tower that rises to a height of 5.2 m above the roofline and is clad in untreated cedar boarding. As well as enriching the townscape, both these features play prominent roles in the scheme's system of passive solar energy.

The interiors of the villas are notable for the generosity of space and daylight in the communal stairs and hallways. This is another feature that sets Arup's scheme apart from most student housing, where architects have been at pains to squeeze circulation areas down to a minimum so as to spend more on the study bedrooms.

The corridors are typically 1.2 m wide, and the daylight enters through the south-facing window walls flanking the staircase.

"It's about the ambience of the building," says McEwen. "Students like to pass the time of day chatting where they pass each other in the passageways, and this allows them to do so without causing obstructions."

All the shower rooms were prefabricated as fibreglass pods, a special feature more common in package-deal student housing. But McEwen, who has had bitter experience of taps left running, explains: "Water and students don't mix. The water gets everywhere."

Each study bedroom is decent in size (just over 10 m²), rectangular in shape, attractively fitted out in clear-varnished pine and comes with power and data cabling already supplied to the fitted desks.

Not surprisingly, the students tend to prefer the blocks with en-suite shower rooms. The adaptation of the dwellings to suit self-catering postgraduate students has resulted in one bedroom on each floor being converted to a kitchen, and an extra bedroom added in a side extension. McEwen admits that strains do occur where kitchens are shared by 10 students.

A post-occupancy evaluation carried out last February reveals that the sense of community Arup Associates strove to engender in the villas has taken root. The evaluation also reported that the converted communal hall "helped students to settle down".

Mike Rowell, chairman of the university's graduate society, points out that, despite being more remote from the city than other residences, students were keen on their Howlands Farm home.