What is Rack-rent?

Legal Definition
Rack-rent denotes two different concepts:

  1. an excessive or extortionate rent, or
  2. the full rent of a property, 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 of the land plus interest on capital improvements plus depreciation and maintenance—the normal market rent of a property—and is not inherently excessive or extortionate. Also, this may be different from the rent actually being received.

Historically, however, 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. The two conceptions of rack-rent both apply when excessive, extortionate 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'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."
-- Wikipedia
Legal Definition
In the US it is applied to a rent that is excessively high. In the UK it applies to an amount that is not less than 2/3s of the rent a premises would attract during the time period of one year.
Legal Definition
A rent of the full annual value of the tenement or near it. 2 Bl. Comm. 43.
-- Black's Law Dictionary
Legal Definition
A rent of the full value of the tenement or near it. 2 Bl. Comin. 48.
-- Black's Law Dictionary