As a legal term, ground rent specifically refers to regular payments made by a holder of a leasehold property to the freeholder or a superior leaseholder, as required under a lease. In this sense, a ground rent is created when a freehold piece of land is sold on a long lease or leases. The ground rent provides an income for the landowner. In economics, ground rent is a form of economic rent meaning all value accruing to titleholders as a result of the exclusive ownership of title privilege to location.
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👉 Ground rent in the context of Georgism
Georgism, in modern times also called Geoism, and known historically as the single tax movement, is an economic ideology holding that persons should own the value that they produce themselves, while the economic rent derived from land—including from all natural resources, the commons, and urban locations—should belong equally to all members of society. Developed from the writings of American economist and social reformer Henry George, the Georgist paradigm seeks solutions to social and ecological problems based on principles of land rights and public finance that attempt to integrate economic efficiency with social justice.
Georgism is concerned with the distribution of economic rent caused by land ownership, natural monopolies, pollution rights, and control of the commons, including title of ownership for natural resources and other contrived privileges (e.g., intellectual property). Any natural resource that is inherently limited in supply can generate economic rent, but the classical and most significant example of land monopoly involves the extraction of common ground rent from valuable urban locations. Georgists argue that taxing economic rent is efficient, fair, and equitable. The main Georgist policy recommendation is a land value tax (LVT), the revenues from which can be used to reduce or eliminate existing taxes (such as on income, trade, or purchases) that are posited to be unfair and inefficient. Some Georgists also advocate the return of surplus public revenue to the people by means of a basic income or citizen's dividend.
In this Dossier
Ground rent in the context of 7 World Trade Center (1987–2001)
7 World Trade Center (7 WTC, WTC-7, or Tower 7), colloquially known as Building 7 or the Salomon Brothers Building, was an office building constructed as part of the original World Trade Center Complex in Lower Manhattan, New York City. The tower was located on a city block bounded by West Broadway, Vesey Street, Washington Street, and Barclay Street on the east, south, west, and north, respectively. It was developed by Larry Silverstein, who held a ground lease for the site from the Port Authority of New York and New Jersey, and designed by Emery Roth & Sons. It was destroyed during the September 11 attacks due to structural damage caused by fires. It experienced a period of almost free-fall, total collapse acceleration lasting approximately 2.25 seconds during its 5.4-second collapse, as acknowledged in the NIST final report.
The original 7 World Trade Center was 47 stories tall, clad in red granite masonry, and occupied a trapezoidal footprint. An elevated walkway spanning Vesey Street connected the building to the World Trade Center plaza. The building was situated above a Consolidated Edison power substation, which imposed unique structural design constraints. The building opened in 1987, and Salomon Brothers signed a long-term lease the next year, becoming the anchor tenant of 7 WTC.
Ground rent in the context of Rentier capitalism
Rentier capitalism is a concept in Marxist and heterodox economics to refer to rent-seeking and exploitation by companies in capitalist systems. The term was developed by Austrian social geographer Hans Bobek describing an economic system that was widespread in antiquity and still widespread in the Middle East, where productive investments are largely lacking and the highest possible share of income is skimmed off from ground-rents, leases and rents. Consequently, in many developing countries, rentier capitalism is an obstacle to economic development. A rentier is someone who earns income from capital without working. This is generally done through ownership of assets that generate yield (cash generated by assets), such as rental properties, shares in dividend-paying companies, or bonds that pay interest.