This article shows that the legislative creation of new regulatory regimes can be approached as a process that carves out new territories of governance. Specifically, using the theoretical framework of social space, it explores the formation of a regulatory community arising out of the United Kingdom's Housing Act 1974, a community made up of the regulatees—not‐for‐profit housing associations—and the state regulator. The article demonstrates that the process of carving out a new territory of governance and the “spatial practices” of the occupiers of this new territory both enable the community to establish a large element of control of the regulatory regime. This analysis challenges an understanding of law as top‐down, substituting a more nuanced, three‐dimensional understanding of the production of norms and “common sense.” Regulatees are not just subject to regulation but shape the space through their expertise and social relations.