Squatters turn out to be the best tenants on avenue that taste forgot

To get to Millionaire's Row in Hampstead, you exit the tube, turn right and climb the steep hill, past the cafes and boutiques. You pass White Stone Pond, levelling out where the horses that pulled the trams once used to drink, and stroll past Jack Straw's Castle and the extension to the Heath where the cruisers go bonk in the night.

The road narrows at The Spaniards Inn, Dick Turpin's resting place between highway robberies, and widens again near the entrance to Kenwood House. Keep on between the high trees and turn left at the lights, and you are no longer in Hampstead, but in the suburbs of Rio or Djakarta, where the incredibly rich keep the sequestered, guarded palaces they rarely visit.

This is Bishop's Avenue, created by the conjunction of huge wealth and lamentable taste. Along its half-mile, set behind railings and low walls, are 20th-century mansions whose one unifying feature is that they were designed by philistines.

Some are sub-Palladian, some sub-Newport, some sub-mock Tudor, some sub-Regency. They have names in curly ironwork; The Summer Palace, The Fountains and Renstead Hall.

The worst carries the words TOPRAK MANSION in gold letters 2ft high above six great taupe-coloured pillars. These piles are owned by companies such as Property Services, by the Kuwaiti royal family, by Cypriot and Indian millionaires, and they are vulgar beyond parody. Lulu once lived here.

In the garden of number 62 there was a party last weekend. But this was no marquee and Bentley job, with Filipino waitresses dishing out champagne to socialites. Rather it was what we in the press call a rave, which is what happens when 1,000 young people get together in a house that isn't theirs and have more fun than we've had since we were 20.

There were battered camper vans the length of the avenue, and men with wings were said to have been seen in the trees. One could only imagine the damage being done and the noise being made by these people.

As far as I can tell, only one person complained. Perhaps they're getting used to it. On 26 August, in the grounds of nearby Kenwood, English Heitage will be holding an outdoor Sound of Music event, and you'll be able to hear 1,000 gay male nuns singing Edelweiss as far away as Milton Keynes. So the noise was tolerable. But what about the damage?

The party was well over by the time I arrived at 62 yesterday afternoon. In a monsoon, I ran up a path through a neglected garden, overgrown now, with great straggling curves of brambles arcing overhead.

The building is said to be worth £3m, and it belongs to Sun Real Estate. They now want it back, and their eviction notices were plastered up in the porch. On the front door little symbols had been painted. Suns, stars, that sort of thing. And in blue and white was the legend, "May all beings be happy". I'm a being, so I tapped on the door.

It was opened by a white man with dreadlocks. He seemed most un-put out by my uninvited appearance. As I explained myself, other young men came into the hall. There I was, a stranger come out of the rain with a notebook and - as far as any of them knew, a nasty attitude. They couldn't be nicer. They were, they told me, members of a community of artists and healers, and they called themselves the Invisible Expanding Collective.

But I was too busy marvelling at what they'd done to the deserted house. In the large hall, up the walls and the stair-well and covering the ceiling, someone had built what looked like a lush, brilliantly-designed set for an expensive performance of A Midsummer's Night's Dream. Shimmering, gossamer material billowed from the sides, fairy wings and silvery light hovered in the air.

It was magical, and the sleeping hippy in me, dormant for 30 years, couldn't help but smile at it. "Far out!" I nearly said. "Amazing! Groovy!" I was back to playing, stoned, with 10 friends and a parachute on top of Parliament Hill on a sunny day in 1969. My response was so ecstatic that they could see I mean them no harm and they relaxed.

They hadn't wanted to talk too much since some of their most articulate members, the healers, were away at the Buddha's Fields festival in Glastonbury, making a Sweat Lodge or a sauna in a yurt. There would be (it was explained) no amplified music and only as much electricity as could be supplied by solar or wind energy. We went to Dave's workshop, where he made his highly coloured pictures and lamps. Dave was a young Moussorgsky, ruddy, bright-eyed, handsome, his hair chaotic and his toenails painted tourquoise. He was a credit to his mum and I bet she loves him to bits.

Carl was older. He'd been a nurse in casualty for 10 years. He was shaven-headed, had a tooth missing, an arm in a sling and was charming. He was also the political one. The collective realised, said Carl, that even empty buildings were "owned by someone and they have a right to their property." Dave wasn't so sure, and nor was I. "They haven't got a right to keep it empty," Dave said. But Carl was determined on non-confrontation. I go the impression that, for Carl, anger is a waste of energy.

Carl judged me well. The collective is shrewd When the Hampstead paper came to call they found themselves interviewing a 26-year-old locally educated daughter of a famous Highgate psychoanalyst. We take our analysis seriously in north London. So he explained they were not squatters who destroyed things, but "site-sitters", who enhanced them then moved on. They had recently site-sat a £6m development in Battersea owned by. Frogmore Developments. The security manager had offered them a reference, Carl told me.

I could believe it. The house, though dilapidated, didn't look like as though it had been empty for a decade or more. The collective had cleaned it up; collective plumbers and electricians had been at work.

They had decorated the walls and scrubbed the floors. When we went to the kitchen they apologised for the mess. There wasn't a mess. At least, not what a family with three kids thinks of as a mess.

The collective must move on next week, though God alone knows that Bohemian Hampstead would rather have them here than have the place neglected for another 15 years by a distant property company, or rebuilt by Ceaucescu's architects. But what Carl and co really want is somewhere they can stay for five years, a development awaiting planning permission, perhaps.

They could take care of it until the owner wants it back. I cannot imagine better tenants.