RACK RENT


A rent that is much higher than market rent usually resulting from one or more of the following reasons:

• shorter than normal occupancy periods.
• illegal or contentious use
• the right to occupy is more like a license than a lease.

Rack rent somehow violates the definition of market rent. That is, rent achieved in the market place under normal terms and conditions.

Alternative definition:

In modern usage a rack rent is usually a rent that represents the full open market annual value of a holding. Called a market rent and less frequently a rack rent. A rack rent may also be the maximum rent permitted by law or an extortionate rent.