A soundscape approach was used for a co-housing development in Newcastle upon Tyne, UK. The outcomes are compared and contrasted with a conventional noise impact assessment. In-situ soundwalks were conducted with the co-housing group during daytime and night-time periods, covering locations with varied sounds and future uses. A virtual soundwalk, including external and internal scenes (with windows open and closed), was created using binaural recordings from the in-situ soundwalk. A separate virtual soundwalk event was organised for the public to investigate the ecological validity of the auralisations. Data collection and analysis methods followed ISO 12913. The questionnaire responses revealed quite different assessments of the acoustic environment compared with the measured decibel values of LAeq,T. These differences could be explained by the perception of the acoustic environment. The process helped the co-housing group to identify their expectations and preferences of the sound environment of their future homes. Ideas to encourage and highlight positive (natural) sounds were identified, as were different uses for external areas. The study illustrates the potential and challenges of using a soundscape approach for residential developments, highlighting the aspects of co-creation and inclusivity.