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Sarah Waters poses between the book stacks at the London Library where she conducts a lot of work and research for her work, including here sixth novel The Paying Guests.Charla Jones/The Globe and Mail

'It's spooky after dark," Sarah Waters says. "And I'm sure there are ghosts."

The prize-winning author of The Paying Guests, her sixth work of historical fiction, is standing in the London Library, a storied literary institution in St. James Square in central London that counts many celebrated British authors, past and present, among its members. It is mid-morning, but still, its atmosphere feels thick with legend.

Up its creaky central stairs and through to the "back" stacks – a marvel of Victorian engineering of four storeys constructed with metal supports and slatted floors, designed to hold thousands of heavy books and allow light and air to circulate – the past looms large. Peer through the floor slats to the levels below and above. A clanking noise rises up; heels on metal flooring. Virginia Woolf walked through here. A shadowy figure moves down below; a hand reaches for a book. Charles Dickens, a founding member in 1841, did research here for his novel A Tale of Two Cities. Rebecca West, John Stuart Mill, Joseph Conrad, Henry James, T.S. Eliot, Arthur Conan Doyle, Winston Churchill, Siegfried Sassoon – they all came here, to the reading room, to the stacks, to access the vast collection of books and periodicals that dates back to the 16th century. A.S. Byatt set the opening scene of her novel Possession in these hallowed spaces, fragrant with that ancient, papery scent of smartness.

"Quite often the lift opens and nobody's there," offers a library assistant, eyes wide behind spectacles.

"You wouldn't think ghosts would need lifts," Waters says without missing a beat.

Everyone speaks in hushed voices – and now muffled laughter. Waters loves Gothic fiction and read it avidly growing up in Wales with her parents and one elder sister. "I was quite a nervy child, and I don't think I was nervy because I read Gothic stuff and watched horror films. I think somehow it was the safety of seeing fears played out and then sort of tidied away at the end," she says.

Any fan of her writing knows that she's a master of suspenseful storytelling. Both of her Booker-shortlisted novels – Fingersmith in 2002, a crime story set in Victorian times, and The Little Stranger in 2009, a tale of a dilapidated, haunted mansion in the 1940s – are inspired by her love of the Gothic crime genre.

The Paying Guests is an exploration of illicit love, marriage and class in post-First World War London, brought to page-turning life with a murder, a cover-up and a police investigation that puts the reader on edge as much as it does Frances Wray, the quirky female protagonist who is never quite in control of her own happiness.

"I come here mainly to research and to think," says Waters. In the dim light, the 48-year-old is a pale figure, all little white hands and hooded eyes. She is short and slight; dressed in jeans, a grey sweater; her short blond hair in an angular crop. "I begin my research into a period through the fiction of that time," she explains when we settle in a small meeting room on the top floor of the library. Each of her novels – starting in 1998 with Tipping the Velvet, about the Victorian-era homosexual underworld – has "grown out of the one before. … With The Paying Guests, I had to go somewhere between Victorian era and the Second World War, and I thought, 'Let's try the twenties.'"

She read A.S.M. Hutchinson's If Winter Comes (1921), Philip Gibbs's The Middle of the Road (1923), E.M. Delafield's Messalina of the Suburbs (1924), among others, to capture the issues and idioms of the day. She also knew what kind of story she didn't want to tell by re-reading the fiction of Virginia Woolf and Aldous Huxley. "That seemed too much my stereotype of the twenties – bright young things – and I wanted more poor, suburban people. And then I had to think of a way to access them and research their lives."

That's when she remembered the famous case of Edith Thompson in 1923, an unhappily married woman in the suburbs of east London who was having an affair with a younger man, Freddy Bywaters. "She was desperately trying to hang on to the respectability she had, and began flirting with the idea of murdering her husband," Waters explains. In the end, Freddy killed the husband, but Edith was also tried and hanged for the murder after explicitly sexual letters she wrote to her lover were discovered. "I knew [the case] contained a lot of the issues at the time, and I got hold of the trial transcripts, which were fantastically useful."

The careful, bookish approach to her imagination began in Waters's academic career. She had completed her masters degree in literature by the early 1990s, followed by a few years working as a library assistant in rare books. By 1995, she had completed a PhD in lesbian and gay historical fiction at the University of London and "had no plans to write fiction," even though she had made up stories as a child.

But then she thought she would try – "It felt like a real adventure and a bit of a lark" – because her thesis had explored the Victorian gay underworlds. "I knew quite a lot about it, and I was young enough to just think, 'Oh, I will take a year and try to write a novel.'" Rejected by 10 publishers, Tipping The Velvet took 18 months to find a home, and then won the Betty Trask Prize, an award for first novels by authors under the age of 35.

"It's how we write about the past that intrigues me, and how we continually reinvent the past," she says, sitting perfectly still at a table. "I just get a real kick out of taking on an era that we think we know quite well and finding new things to say about it." Often that difference is found through gay and lesbian characters who allow her to explore identity, sexuality and cultural mores. The love affair in The Paying Guests is unexpected – between Frances and Lillian, the married woman who is a lodger in the house along with her husband.

"[Homosexual relationships] are interesting to me because it's the heart of my own life, and I am interested in social history. … I don't put them in consciously," she adds. Waters and her partner, a magazine copy editor, have been together for 14 years. She is also the first reader of Waters's manuscripts. "I really liked Frances, and she was very clear to me, but [my partner] found her really annoying. You have to hear that feedback," she says with a laugh as understated as she is.

Waters speaks quietly, as if too shy or modest to boast about her creative process. "When I think back to my childhood, I think of making things. My father was an engineer, retired now, and we made puppets and models together. He was fantastically creative. When writing fiction, you're making things in a different sort of way," she explains softly. "I think of novels as quite nuts-and-boltsy – a little piece of architecture and engineering."

A smile rises on her face as she says this. I tell her my delight in reading some of the scenes in The Paying Guests, in which – as has often been said of her books – the house is like a character in itself, full of noises, scents, secrets and conflicts.

"I think I have always wanted to write a novel in which two women have to carry a body down the stairs. It's just so great," she says, twisting her little hands together. "You think, 'Oh my God, are they going to get caught?' And we've seen it done so many times. What is that like? The heaviness of the body, the unwieldiness, the blood, the cleaning it up. It's just a fantastic thing to go for," she continues, breaking into a full-blown grin.

Her exterior gives little indication of what lies in the house of her imagination. And that interior space, too, is something she acknowledges is fun to explore, quixotic and mysterious.

"It takes me four years to write a book," she explained when we were in the spooky Victorian stacks. She stood there among the ghosts of brilliant writers; in the midst of the silent wisdom of hundreds of thousands of books, a collection that has never been culled and which many people came to rescue when the library was bombed during the Blitz. "[The story] has to feel that it's calling to me," she stated quietly.

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