A loud bang goes off. I jump. "Don't worry, it isn't a bomb, it's only a firework. This is Chelsea, you know," says Ben.
Indeed it is. I am in London's richest borough, in the Cross Keys, a gorgeous old pub that welcomed Whistler, Sargent and Turner as regulars and in more recent years hosted engagement parties for Pippa Middleton's set. The fires are blazing, the battered old Chesterfields are comfortable, the tea is piping hot.
Except Ben is not the barman. He is a squatter, who has welcomed me in from behind a boarded-up door. The pub closed a few months ago, after the owner said it was losing too much money.
Along with 16 others, a rag-tag collection of homeless, students and middle-class charity workers, Tom has moved into the vacant pub and made it his temporary home.
Most of them came from the old BT headquarters in Holborn - the Hobo Hilton, as it was nicknamed - and this week they have lost a court hearing and will be evicted from the pub. Where will they move to? Another commercial property.
Welcome to the new world of squatting, far removed from the image of grungy bedsits in the wrong end of town, where the whiff of soft drugs failed to mask the stench of unwashed residents. Modern office blocks, warehouses, pubs and clubs are the venues of choice for today's modern squatter.
And the Coalition government is responsible.
On September 1, the law changed, beefing up homeowners' rights. Squatting, which for three decades was a civil, not a criminal offence, is now outlawed in residential properties. One person has already been sentenced to 12 weeks behind bars. However, commercial properties are not affected by the change in the law.
So the squatters have started moving into the increasing number of empty business premises that have emerged as the result of the recession.
David Marsden, property litigation partner at law firm Charles Russell, says of the change in the law: "It has worked. It is immediately noticeable." Peter Mooney, who runs a bailiff company, says: "It's all sorts of buildings: office blocks, industrial warehouses, even one local authority leisure centre, which had been used by the squatters to host a rave. Any vacant commercial properties are vulnerable."
Marsden adds that most squatters are very well-informed. "The moment the law changed, you almost instantly saw the disappearance of the Section 6 notice on buildings [the notice which informed any potential bailiff that they needed a court order]."
Now there is usually a "144 notice" on commercial properties where squatters have moved in. It states that "this is not a residential building", showing that the new residents know their rights and know they are not committing a criminal act.
Outside the Cross Keys there is one of these notices. Alongside it is a rather pretty sign, decorated with pictures of flowers, saying: "Hello Neighbours", promising the Chelsea residents that they will not be noisy.
Further proof, if needed, that this is no ordinary squat.
Inside, the pub has been looked after. The bar and restaurant (wagyu beefburger with truffle fries used to be on the menu at £16) are pretty tidy and the squatters say that they have cleared up the mouse problem and leak they discovered when they moved in. The glasses behind the bar have been cleaned and the ashtrays and empty coffee cups are less messy than the average student digs.
Indeed, maybe it's the boarded-up windows and low lighting, or the roll-up cigarettes, but the whole atmosphere reminds me of being back at university, where tedious, interminable late-night "debate" replaced normal adult conversation.
Ben, 19, from Surrey, wearing a Barbour jacket and rather natty wool shirt from Muji, was studying for his A-levels in economics, further maths and biology before he dropped out for a variety of complicated reasons he skirts over. He says: "I don't agree with squatting in a residential home. At the end of the day it is owned by an individual, not a corporation." His comment immediately sparks another heated debate over what is a corporation and whether, if the property is owned by the mortgage company, not an individual, it is OK to squat there.
I end up having to be referee between Arthur, who fancies himself as a rabble-rouser - "they are frauds, they are enslaving us to debt and it is totally immoral, that is why we are squatting" - and Ruby, softly spoken and matronly, who is the moderate among them. At one point she takes me aside, and says: "If they'd just occasionally take a shower, they would be taken more seriously."
The arguments are very good-natured, in spite of, or maybe because of, some of them tucking into a bottle of 1983 Cognac (a present from one of their grandmothers, they insist).
They all have different reasons for squatting, but they are adamant that an empty commercial property is fair game.
Ruby says: "The last flat I was staying in I used up 80 per cent of my earnings on rent, and it was owned by an absentee landlord and the damp was so bad I ended up living in a tent in the garden. But living here, I can now go out and work and do something interesting."
This particular group of articulate squatters is, if not supported, then certainly tolerated by the residents, many of whom are fairly resentful of the pub's owner trying to convert the building into a £10 million luxury home complete with a basement swimming pool.
Arthur says: "We are helping to save this pub. We have let potential buyers in to inspect the property. We've cleaned it up, made it habitable."
Many of these squatters believe they have a higher purpose - rather than just the need for a free mattress to sleep on. In recent years a number of increasingly high-profile commercial properties have been transformed by squatters into "art spaces". These have included the former Mexican embassy and the magnificent old Mayfair headquarters of Reader's Digest, where plays, concerts and exhibitions were hosted.
However, lawyers who represent landlords say tidy squatters remain unusual.
Michele Freyne, partner and head of property litigation at law firm Howard Kennedy, says: "I've been dealing with it for years, and some squatters live in places and really look after them, but many squatters really do trash the place. You see a lot of gratuitous, unnecessary mess."
Marsden at Charles Russell says that the bare minimum cost to a commercial landlord of evicting squatters, even friendly ones, is £2,000 in court expenses. The less friendly ones strip the buildings of wiring and copper before leaving.
One thing is clear: squatting in commercial properties is on the increase and not going to go away, as more businesse
s go bust and youth unemployment and homelessness remains high.
As Marsden says: "Pubs are prime targets for squatters. And an increasing number of pubs are closing down. They are commercial properties, but usually come with living accommodation. And who doesn't want to live in a pub?"
HOW HAVE SQUATTERS' RIGHTS CHANGED?
On September 1, a three-decades-old law that famously granted "squatters' rights" was dismantled. In its place was introduced a piece of legislation that made it far easier for a homeowner to kick out a squatter and criminalised the activity.
Previously, if a property was vacant, a squatter could enter (as long as they had done so peacefully - and it was almost impossible to prove who had broken a window once the house was vacant) and live there. To evict squatters, the homeowner usually had to go to the expense and hassle of going to court.
Michele Freyne, partner and head of property litigation at Howard Kennedy, says that the police were "often reluctant to act" under the old law.
Since September 1, those who squat - anyone who "knows or ought to know that he or she is a trespasser" - in a residential building can face up to six months in jail and a fine of up to £5,000 under section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act.
The police are now free to enter and search residential properties if there is a suspected squatter. One man has already received a 12-week custodial sentence under the new Act.
Commercial properties, however, are free from this rule change. This means that landlords of commercial buildings still need to go to the trouble of going to court to evict squatters. It also means that squatters are now turning to pubs and other business premises.