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The Pamphlet Collection of Sir Robert Stout: Volume 72

What is Ground-Rent?

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What is Ground-Rent?

Ground-Rent is the name given to the payment made by tenants to landlords, or by leaseholders to the State, for the use of bare land, apart from improvements. If a tenant hires the use of buildings, or other improvements also, he makes a further payment that combines the charges of interest, depreciation, and insurance.

Ground-rent is not, as some of our opponents suggest, determined by the net value of the produce. Mill defines the ground-rent of land as "the excess of its produce beyond what would be returned to the same capital if employed on the worst land in cultivation." It is not the measure of the whole using value of land, but of that part only which arises from the use of certain specially desirable lands. All lands do not possess this distinction. Extra fertility confers it upon some lands and extra facilities confer it upon others. It is this extra desirability that makes tenants willing to pay ground-rent for the lands possessing it rather than settle on those that, through not possessing it, can be got for less rent, or even free of rent. The same consideration makes other men willing to pay a sum of money to purchase these special advantages in fee simple, and so to commute the annual payment. The purchasers enjoy henceforth, without annual payment, the special benefits for which tenants pay ground-rent.

Ground-rent increases in all progressive communities where public monies are spent in providing and maintaining roads and other useful services, as, for instance, by the addition of
  • a railway station,
  • a post office,
  • a money order office,
  • a telegraph or telephone office,
  • a school, or
  • a water supply.
It rises also where population grows, where private enterprise increases, or labour is economised by sub-division. These developments show themselves in the addition of such facilities as
  • a blacksmith's shop,
  • a store,
  • a dairy factory,
  • a public hall,
  • a branch bank, or
  • a coach service.

Any reduction of fares or freights on the railway, or of the charges made by any conveyance plying for public hire, acts in the same way to increase the ground-rent value of the lands so served page 6 The existence of public and private enterprises is the only reason for higher land values arising in towns and cities than in country districts.

From the foregoing facts it will be readily seen that ground-rent is an economic necessity of modern life. It is not, therefore, an element that can be denounced out of existence, as some would appear to suppose. It is not an evil thing. It is a direct payment for advantages received or facilities enjoyed through living in a community. Anyone can escape from ground-rent if he chooses to go further afield until he reaches land that is so far from a community as to possess none of the conveniences for which rent is the payment.

There are quantities of such land in the world upon which a bare, but solitary, existence can be maintained. No rent is obtainable from land so situated, however fertile it may be.

Ground-rent, therefore, being the payment for facilities conferred by the community should naturally, and of right, belong to all, and not to individuals.