Mutual Lease

= "What if rent was ‘paid’ in social and ecological value generated for the commons?" [1]: a lease rewritten around a shared mission, non-financial rent and mutual accountability between community occupiers and mission-aligned landlords.

Context

Calvin Po (Dark Matter Lab):

"There is a long history of rent charged as a share of the harvest, which meant the landlord carried part of the risk of a bad year. On the other hand, a fixed rent was due whatever the ground yielded. Fixed rents in Irish tenancies, compounded with crop failure during the Great Famine, produced mass evictions and arrears rather than lower rents, and why the Land League’s central demand was a ‘fair rent’ determined judicially rather than by the landlord.

The last shift is the one we live inside. Over the twentieth century, spaces we need for living, from homes to social amenities, became financialised assets extracted for maximum returns. The real estate concept of ‘highest and best use’ continues to underpin the logic of our cities, where what happens is generally what pays the most rent. The civic assets that keep communities thriving and resilient face losing this contest every time, not because they produce less value but because what they do produce is not easily enclosed, sold, and priced.

We still inherit this legacy in our leases. Fixed rent moves risk onto the party least able to absorb it, which is still what a commercial lease does. And every clause of the modern lease was refined during that last phase, by and for parties whose interests genuinely were opposed. But what is clear is that how we structure rent can have a transformative social effect. If the outcome we want is thriving and resilient communities, how might we redesign rent? What if rent was ‘paid’ in social and ecological value generated for the commons?"

(https://darkmatterlabs.substack.com/p/rent-reproduces-the-economy-we-have)

Description

Dark Matter Lab:

"Mutual does not mean the occupier wins. A lease that simply moved power from the freeholder to the tenant would be as brittle as one that hoards it with the owner.

The point of writing a shared mission into the lease is that it commits both parties to something neither controls alone. The freeholder is bound to the purpose as well as the occupier. Decisions about works, use, and money are taken against that purpose rather than against each side’s separate interest. Rent becomes one of several things either party might contribute towards this relationship.

That is also the answer to the durability problem. Mission-aligned landlords already exist. Yet a mission-aligned relationship that survives the people who made it is far more powerful. A board changes, a foundation reprioritises, a portfolio is sold, a council administration turns over, and the community organisation discovers that what it had was a favour rather than a right.

Covenants could turn that goodwill into a binding purpose, where they travel with the building. The mission could be encoded as landlord and tenant covenants, where promises either party makes about the purpose of the place are inherited by whoever buys the freehold or takes up the tenancy next.

Company law has been working on a similar problem. Steward-ownership, as set out by the Purpose Foundation, rests on separating economic rights from control: profits serve the purpose, and voting control stays with people committed to it rather than with whoever holds the capital. The mechanisms are various – a “perpetual purpose trust” (a foundation-owned holding company), or a “golden share” (a veto-only share held by an independent asset-locked entity that can block any change to the provisions protecting the mission while having no say in daily operations). Patagonia is the best-known case, where its voting shares were moved to a purpose trust and its economic rights to a separate collective (see Bates Wells’s write up of this approach).

What that field has demonstrated is that a mission can be held by an instrument instead of by the intentions of its current owners. For buildings, we think the lease is where that question gets answered. Mutual accountability guards against mission drift running in either direction: the occupier drifting from the purpose the freeholder supported it for, and the freeholder drifting back towards extraction."

(https://darkmatterlabs.substack.com/p/rent-reproduces-the-economy-we-have)