It was hypothesized that a familiar environment would activate old habits established through lifelong experience, thus increasing the functional and social competence of patients suffering from senile dementia. Two collective housing units for about ten patients each were built at the Kroksbck housing area in Malm& The intention was to follow the patients for two months when they remained at the geriatric hospital and then for another four months after they had moved to the two collective housing units. The results showed that collective housing in small units, especially if the environment was decorated in an old and familiar style, had an activating effect on patients with old age dementia. It actually provided a much better therapeutic environment than the conventional geriatric hospital.