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rent,in law, periodic payment by a tenant for the use of another's property. In economics, its meaning is more complex, but since the word rent means any income or yield from an object capable of producing wealth, its limitation to a more special sense is somewhat arbitrary and justified only by a general consensus of opinion and usage. The term rent is now ordinarily used in the broad sense and, besides the return from land, includes the return from such things as tools, machinery, and houses. Objects are rented for a limited period of time and are generally expected to be returned in their original condition. The early English writers on economics (16th–18th cent.) used the word to mean interest on a loan, but its economic meaning gradually narrowed to the sense of the return on land. Modern rent doctrine began in the 18th cent. The physiocratsphysiocrats
, school of French thinkers in the 18th cent. who evolved the first complete system of economics. They were also referred to simply as "the economists" or "the sect." The founder and leader of physiocracy was François Quesnay.
..... Click the link for more information. centered their economic system on land. They believed that rent was measured by the net product, i.e., the surplus over the cost of production. Because they identified wealth with fixed material objects, the physiocrats considered rent not as the variable yield from the land but as a fixed value, which they called "current price of leases" and "disposable revenue." Adam Smith attempted to formulate a "natural rate" of rent based on the laws of supply and demand. This rate would be an amount high enough to induce the landowner to keep his land in cultivation and low enough to allow the tenant to subsist. David RicardoRicardo, David,
1772–1823, British economist, of Dutch-Jewish parentage. At the age of 20 he entered business as a stockbroker and was so skillful in the management of his affairs that within five years he had amassed a huge fortune.
..... Click the link for more information. held that demand determined the amount of marginal land under cultivation, and that rent was determined by this margin, which had the highest costs of production. Ricardo attacked Smith for putting rent on the same footing with wages and profits as one of the costs of production. Ricardo thought that high or low wages and profits were the cause of high or low prices, while high or low rents were the effect of these prices. Critics of Ricardian theory, such as Henry GeorgeGeorge, Henry,
1839–97, American economist, founder of the single tax movement, b. Philadelphia. Of a poor family, his formal education was cut short at 14, and in 1857 he emigrated to California; there he worked at various occupations before turning to newspaper writing
..... Click the link for more information. , argued that monopolistic control of rent was the cause of poverty, which could only be cured by converting private rights into public by the medium of a single tax on land. Economic rent is the difference between the compensation for a factor of production and the amount necessary to keep it in its current occupation. In economic theory, under perfect competition, there would be no economic rent. Ground rent is paid to a landowner for the lease of property, often under long-term leases (such as a 99-year lease).
See C. Rowley and R. D. Tollison, ed., The Political Economy of Rent Seeking (1988).
rentsee ECONOMIC RENT.
a monthly payment collected for the use of a housing unit.
In the USSR, where most of the expenses for the maintenance of the state-owned housing fund are borne by the state, rents are the lowest in the entire world, amounting to 4–5 percent of the family budget. The rent does not include the cost of utilities (gas, telephone, and electricity, which are paid separately). The amount of rent and the procedure for paying it are established by Soviet legislation (for example, by the Basic Principles of the Civil Legislation of the USSR and the Union Republics) and are spelled out in the provisions of the civil codes of the Union republics and in other law-making instruments.
The base rent and the rate assessed for various categories of housing units depend on location and availability of facilities; they are established by the local soviets (taking into consideration the total population of the city) and are uniform for the given city. The amount of rent depends on the earnings of the tenant himself or of the member of his family having the highest earnings. In practice the payment for 1 sq m of living space does not exceed 13.2 kopecks; the rate may be lowered in a particular house if any important facilities are lacking. Reduced rent rates are also established for certain categories of families of enlisted privates and noncommissioned officers. The rent for generals, officers, and reenlisted servicemen is specially calculated.
The rent of a dwelling space occupied by the tenant himself and by the members of his family and his dependents, including a domestic helper, is paid for at a single rate within the norms of the dwelling space (for example, in the RSFSR, 9 sq m for each person plus 4.5 sq m additional space for the whole family or a single tenant). Additional space over and above the indicated norm is paid for at a higher rate. The additional dwelling space allocated to certain tenants (including Heroes of the Soviet Union, Heroes of Socialist Labor, Honored Scientists, Honored Art Workers, Honored Engineers, researchers, and recipients of a special pension) is paid for at the single rate. Recipients of a special pension and members of the family of such a person pay rent at the rate of 50 percent.
The rent for a dwelling space in houses owned as personal property by citizens is determined by agreement between the parties within the maximum rates established for the particular category of housing. In houses belonging to housing-construction cooperatives, members of the cooperative pay monthly maintenance expenses at a rate (for 1 sq m) fixed at the general meeting of all members of the housing-construction cooperative.
In capitalist countries, rent is high and represents a heavy burden to the working people: it absorbs 25–35 percent of their earnings. Despite laws in a number of countries on rent “freezing,” rent costs are skyrocketing. Even with the acute housing crisis in capitalist countries, many housing units are not occupied because of their excessively high rent.
a type of income regularly received from capital, land, and property and not related to entrepreneurial activity. Landowners receive land rent, which may be in the form of absolute rent, differential rent, or monopoly rent. In many capitalist nations, the interest paid on bonds to float state loans is also known as rent. Rentiers, the individuals whose income is derived primarily from rent, form a parasitic stratum of society.