The quest for alternatives to traditional psychiatric wards has a long history but methodological difficulties have limited research into their benefits. Two UK studies suggest that community-based residential alternatives are valued by service users and may be cost-effective. Establishing and/or maintaining such services, where they function as an integrated component of local acute care pathways, is a justifiable decision. However, our findings do not provide compelling evidence that they should be seen as essential in every catchment area. Quality of therapeutic relationships appears central to service user experiences, and future research should explore how this may be improved in both hospital and community settings.