Rack-rent denotes two different concepts:
# an excessive
rent
Rent may refer to:
Economics
*Renting, an agreement where a payment is made for the temporary use of a good, service or property
*Economic rent, any payment in excess of the cost of production
*Rent-seeking, attempting to increase one's share of e ...
.
# the full rent of a
property
Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the right to consume, alter, share, r ...
, including both land and improvements if it were subject to an immediate open-market rental review.
The second definition is equivalent to the
economic rent
In economics, economic rent is any payment (in the context of a market transaction) to the owner of a factor of production in excess of the cost needed to bring that factor into production. In classical economics, economic rent is any payment ...
of the land plus
interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...
on
capital
Capital may refer to:
Common uses
* Capital city, a municipality of primary status
** List of national capital cities
* Capital letter, an upper-case letter Economics and social sciences
* Capital (economics), the durable produced goods used fo ...
improvements plus
depreciation
In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the ...
and
maintenance
Maintenance may refer to:
Biological science
* Maintenance of an organism
* Maintenance respiration
Non-technical maintenance
* Alimony, also called ''maintenance'' in British English
* Champerty and maintenance, two related legal doct ...
—the normal market rent of a property—and is not inherently excessive. Also, this may be different from the rent actually being received.
Historically, rack-rent has often been a term of protest used to denote an unjustly excessive rent (the word "rack" evoking the medieval
torture device), usually one paid by a
tenant farmer
A tenant farmer is a person (farmer or farmworker) who resides on land owned by a landlord. Tenant farming is an agricultural production system in which landowners contribute their land and often a measure of operating capital and management, ...
. The two conceptions of rack-rent both apply when excessive rent is obtained by threat of eviction resulting in uncompensated dispossession of improvements the tenant himself has made. I.e., by charging rack-rent, the
landowner unjustly uses his power over the land to effectively confiscate wages, in addition to merely charging the tenant interest and depreciation on the capital improvements which the landlord himself has made to the land.
When there is no accessible rent-free land, any improvements in the condition of society, be they in the form of civilizational progress or local improvement, are recaptured in the form of higher land values, and the leftover wages after rent is paid will tend towards subsistence, as described by
David Ricardo
David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...
's
Law of Rent. Such rents can be described as rack-rent, and this sense of the term is economically meaningful, and distinct from other forms of rent.
In Ulster in the 1700s, "... landlords were able to 'auction off' leases to the highest bidders. That practice, known as 'rack renting', forced renters to bid more than they could afford to pay."
[H. Tyler Blethen and Curtis W. Wood Jr., ''From Ulster to Carolina,'' Revised Edition, North Carolina Dept. of Cultural Resources, Office of Archives and History, Raleigh, North Carolina, circa 2013, p. 17.]
See also
* ''
Castle Rackrent''
References
External links
Dictionary definition
{{DEFAULTSORT:Rack-Rent
Renting