When it comes to finding somewhere to stay, London spoils you with its choices. The different forms of tenure were prevalent in the working-class housing market of 20th century London, a system of tenure which, for example, guaranteed palatial West End residences for workers, would have been completely out of phase with the structural framework of the market, and would therefore have been untenable. The most prevalent form of tenure relations in working-class districts was in fact a mutation of the leasehold system which, as has been shown, was so appropriate and effective in the development and maintenance of the attractive West End residences of the wealthy. The ‘sweated’ leasehold system is an apt label for this set of socio-economic relations between estate owners or small freeholders and the occupants of the houses. The term ‘sweated’ is borrowed directly from its more familiar usage in connection with that segment of the London labour market charatterized by a high degree of sub-contracting–the ‘sweated’ labour system described in Chapter 1. The similarities between the socio-economic relations and outcomes of both systems are striking. The crucial element of the ‘sweated’ leasehold system was the proliferation of middlemen–the original leaseholder plus a chain of sub-lessees –between landowner and house occupants.
Large estate owners, who were interested in reliable, long-term, low-yield investments, were unwilling to enter into direct leases with working-class house occupants whose wages were low and irregular. Most owners of large amounts of capital preferred to invest their funds in other sectors of the local and foreign capital markets either because these were considered to be more lucrative and less risky capital outlets than the working-class residential sector, at least until 1975, or to avoid the administrative complexities and unfavourable public image which being a large slumlord involved. This left the small investors for whom house property in inner London was the most popular, accessible and lucrative means of capital gain. The proliferation of middlemen was a response to the relatively meagre resources which these investors possessed as it allowed the capital costs to be spread among as many people as possible. Each middleman was both a tenant and a landlord. As tenant he leased part of the prior middleman’s lease and as landlord he expected a return on his equity investment from the tenant below him. As one descended the leasehold ladder so the length of the tenancies diminished, usually from the 99 year ground leaseto the weekly-tenancy arrangement with the house occupants, the rent increased, as it had to [1261 provide a return to all the prior investments.
In effect, the ‘sweated’ leasehold system was a means of sub-contracting management of residential property and exploitation of tenants. As the duration of a middleman’s control of the property decreased, so the level of exploitation increased. This exploitation was justified on the basis that as the duration of the leases decreased, so the risks of defaults, or of demand fluctuations, and the administrative burdens increased; and this was probably true. But it is important to realize that exploitation was built into the ‘sweated’ leasehold system, it was not an aberration of the system–even if each party was ‘honourable’ and demanded a ‘fair’ return (that is, played by the rules) the house occupants ended up paying higher rents than would have been the case in the absense of middlemen, as was the case in the wealthy West End and in many suburbs. The advantages of this tenure system were that it facilitated the construction or conversion of housing for the working class without necessitating the raising of unmanageably-large amounts of circulating capital; it provided incentives for rapid economic advancement (seldom achieved in actuality) to thousands of middle-stratum small investors thereby ensuring their cooperation in a social system which exploited them as well; and it insulated estate owners and ground leaseholders from the demand fluctuations and administrative headaches of the working-class housing market, whilst allowing their property to be developed and produce a return. However, the ‘sweated’ leasehold system was problematic in a number of important respects–economic, environmental and social, and physiological. Each was disastrous for the bulk of the working class, while the first was very advantageous for the mainly middle-stratum slum landlords, the second was worrisome for the estate owners, and the third gave capitalist employers and merchants some anxiety. A brief outline of the nature and outcomes of these three broad dysfunctionalities is instructive for analytical purposes, but it must be borne in mind that they were intimately connected in reality. The rents which working-class tenants paid in the degrading inner city environments were exhorbitant in relation to their wages, in relation to rents in other sectors of the housing market, and when measured against the quality and quantity of the commodity ‘housing’ which they received in return.
As Lickcheese, a rent collector, confides to Trench, in George Bernard Shaw’s Widowers Houses: “Tenement houses, let from week to week by the room or half room –aye, or quarter room. It pays when you know how to work it, sir. Nothing like it. It’s been calculated on the cubic foot of space, sir, that you can get higher rents letting by the room than you can for a mansion in Park Lane.” The 1984-5 Royal Commission found that over 85% of the working class paid more than one-fifth of their income in rent, and nearly 50% paid between one quarter and one half. And this rent generally only paid for a single room, which was all that even many skilled workers could afford; two rooms were often beyond the means of regularly employed workers. Although most slunlandlords were ‘little men’ scraping a living from their few houses and hardly able to afford necessary repairs, it was often possible to make large profits from slum property. These overcrowded ‘dwellings’ were in effect machines for manufacturing rent for their leaseholders, indeed many streets were called … RENTS, e.g., Colliers Rents.
As William Howitt wrote in 1946: “There are courts and alleys innumerable called by the significant name of RENTS….they are not human habitations….They are merely so many man-traps to catch the paying animal in; they are machines for manufacturing rent.” Much of the blame for these high rents was then, as it is today, mistakenly heaped on the shoulders of speculative landlords, of either the living-on-the-premises or the absentee variety. Some landlords were probably corrupt but the majority ‘played by the rules’ of the ‘sweated’ leasehold system, with its built-in exploitation and nothing about profit limits or ‘fair rents,’ a highly ambiguous concept in any case. Nor were high slum rents caused by the fact that they were adjacent to expensive commercial land. Commercial land values could only be realized if and when the land was developed and used for commercial purposes.
The potential for realizing commercial values which central working-class residential land enjoyed could hardly cause high rents; rather it provided powerful justification for the rents which landlords charged. The real basis of high rents in the slums was the utter powerlessness of most members of the working class in 19th century British capitalist society. Rents were set in the weekly struggles between tenants and rent collectors, whose job was to extract as much of the workers’ wages as possible on behalf of the landlords. The workers’ social, economic and political powerlessness, and the fact that their locational choices were restricted to the totally inadequate central area, meant that they usually came off worst in these interactions, almost irrespective of the quality or quantity of housing which they rented. This fact largely explains why rent increases bore such a close relationship to increases in money wages and proved to be the great exception to the general trend of falling prices, especially in the late 19th century. As workers’ ability to pay increased, so the rent collectors sapped more money from them, thereby virtually negating improvements in real wages or general living conditions.