In economics, an absentee landlord is a person who owns and rents out a profit-earning property, but does not live within the property's local economic region. The term "absentee ownership" was popularised by economist Thorstein Veblen's 1923 book of the same name, Absentee Ownership.
When used in a local context, the term refers to a landlord of a house or other real estate, who leases the property to tenants, but fails to ensure that proper maintenance is done on it, or does only the minimum required by law (the term slumlord is also used to describe such a person). This, in turn, leads to what may appear to be abandoned buildings, causing significantly lowered property values and urban blight.
Tax policy seems, overall, to favour absentee ownership. However, some jurisdictions seek to extract money from absentee owners by taxing land. Absentee ownership has sometimes put the absentee owners at risk of loss.
In Ireland before 1903
Absentee landlords were a highly significant issue in the history of Ireland. During the course of 16th and 17th centuries, most of the land in Ireland was confiscated from Irish Catholic landowners during the Plantations of Ireland and granted to Scottish and English settlers who were members of the established churches (the Church of England and the Church of Ireland at the time); in Ulster, many of the landowners were Scottish Presbyterians. Seized land was given to Scottish and English nobles and soldiers, some of whom rented it out to the Irish, while they themselves remained residents of Scotland and England. By 1782 the Irish patriot Henry Grattan deplored that some £800,000 was transferred annually to such landlords. He attempted to place an extra tax on remittances to the British. But many absentees also reinvested part of their rents into roads and bridges, to improve local economies, that are still seen today. A notable beneficial absentee in the 19th century was Lord Palmerston, who went into debt to develop his part of Sligo; an investment that eventually paid off.
By the 1800s resentment grew as not only were the absentee landlords Protestant (while most tenants were Catholic and forbidden to inherit land), but their existence meant that the wealth of the land was always exported. This system became particularly detrimental to the native population during the Great Irish Famine when, despite Ireland being a net exporter of food, millions starved, died of disease, or emigrated. In the years following, the land issue with the Irish Land League's Land War became a significant issue in Ireland. The land issue was one of the historic factors which resulted in Ireland's troubled history until the 1920s, though it had largely been addressed legislatively by 1903 in the Irish Land Acts.
On Prince Edward Island before 1867
An absentee landlord crisis was a key factor in Prince Edward Island's decision to become a part of Canada when the idea of Confederation was proposed in 1867. In the mid-1760s, a survey team divided the Island into 67 lots. On July 1, 1767, these properties were allocated to supporters of King George III by means of a lottery. Ownership of the land remained in the hands of landlords in England, angering Island settlers who were unable to gain title to land on which they worked and lived. Significant rent charges (to absentee landlords) created further anger. The land had been given to the absentee landlords with a number of conditions attached regarding upkeep and settlement terms; many of these conditions were not satisfied. Islanders spent decades trying to convince the Crown to confiscate the lots, however the descendants of the original owners were generally well connected to the British government and refused to give up the land.
In 1853, the Island government passed the Land Purchase Act which empowered them to purchase lands from those owners who were willing to sell, and then resell the land to settlers for low prices. This scheme collapsed when the Island ran short of money to continue with the purchases. Many of these lands also were fertile, and were some of the key factors to sustaining Prince Edward Island's economy.
In 1864, the Island government saw union with Canada as a possible solution to the landlord crisis. This followed a rent strike and riots on the Island. At the Charlottetown Conference, delegates proposed a fund to purchase landlords' holdings if the Island joined Confederation. Several weeks later at the Quebec Conference this offer was withdrawn. The Island resolved not to enter Confederation as a result. The government refused offers from the other provinces and finally relented in 1873 after the local economy was pushed near to collapse. Under the terms of union, Canada agreed to provide the Island with an $800 000 fund to purchase the remaining absentee holdings. in 1875, the Land Purchase Act was enacted to force owners of the large estates to sell their holdings to the provincial government.
The Island's experience with absentee landlords affects its land ownership laws to this day. Non-residents are not permitted to purchase land in excess of two hectares without approval from the cabinet. In 2009 an American was fined $29,000 for contravening these laws.
In Palestine before 1948
The Ottoman Empire embarked on a systematic land reform program in the second half of the 19th Century. Two of the new laws were the 1858 land registration law and the 1873 emancipation act.
Prior to 1858, land in Palestine, then a part of the Ottoman Empire since 1516, was cultivated or occupied mainly by peasants. Land ownership was regulated by people living on the land according to customs and traditions. Usually, land was communally owned by village residents, though land could be owned by individuals or families.
In 1858 the Ottoman Empire introduced The Ottoman Land Code of 1858, requiring land owners to register ownership. The reasons behind the law were twofold. (1) to increase tax revenue, and (2) to exercise greater state control over the area. Peasants, however, saw no need to register claims, for several reasons:
- land owners were subject to military service in the Ottoman Army
- general opposition to official regulations from the Ottoman Empire
- evasion of taxes and registration fees to the Ottoman Empire
The registration process itself was open to misregistration and manipulation. Land collectively owned by village residents ended up registered to one villager, and merchants and local Ottoman administrators took the opportunity to register large areas of land to their own name. The result was land that became the legal property of people who had never lived on the land, while the peasants, having lived there for generations, retained possession, but became tenants of absentee owners.
The 1856 Emancipation Reform Decree and 1869 citizenship law was interpreted as giving Jews the right to own land in Ottoman Syria under their own name. The changing of this law (the change occurring at the same time as the freeing of the Africans in the United States and in South America and the emancipation of the serfs in Russia (held in slavery by the Russian landowning class) was a part of the worldwide 19th century movement towards emancipation and civil rights for oppressed minorities. This 1873 secular land reform/civil rights law was popularly confused with a religious law and it was held as a "humiliation to Islam that Jews should own a part of the Muslim Ummah". The confusion between religious and secular law made the laws (ended in 1873) against Jewish ownership of land 'religious laws'.
Over the course of the next decades land became increasingly concentrated on fewer hands; the peasants continued to work on the land, giving landlords a share of the harvest. This led to both an increased level of Palestinian nationalism as well as civil unrest. At the same time the area witnessed an increased flow of Jewish immigrants who did not restrict themselves to the cities where their concentration offered some protection from persecution. These new Jews came hoping to create a new future in what they regarded as the homeland of their ancestors. Organizations created to aid the Jewish migration to Palestine also bought land from absentee landowners. Jewish immigrants then settled on the land, sometimes replacing peasants already living there. A steady arrival of Jewish immigrants from 1882 led to several peasant insurgencies, recorded from as early as 1884-1886.
- Veblen, Thorstein (1996). Absentee Ownership. ISBN 1-56000-922-5.
- Fisher, Peter S. (March 1985), "Corporate Tax Incentives: The American Version of Industrial Policy", Journal of Economic Issues, 19 (1): 1–19, doi:10.1080/00213624.1985.11504338, JSTOR 4225540
- Lee, Kangoh (2003), "Should Land and Capital be Taxed at a Uniform Rate?", Canadian Journal of Economics, 36 (2): 350–372, doi:10.1111/1540-5982.t01-1-00004, JSTOR 3131847
- N Rajagopalan (2003), Governance through ownership: Centuries of practice, decades of research, The Academy of Management
- Ross, David (2002), Ireland: History of a Nation, New Lanark: Geddes & Grosset, ISBN 1-84205-164-4 page 226
- "Library and Archives Canada" Archived 2006-02-11 at the Wayback Machine, Collections Canada
- American fined for buying P.E.I. land CBC News (Nov 13, 2009)
- Ottoman Land Registration Law as a Contributing Factor in the Israeli-Arab Conflict Archived 2008-09-16 at the Wayback Machine, Jon-Jay Tilsen, Congregation Beth El–Keser Israel (retrieved August 14, 2006)
- Rodrigue, Aron (1990), French Jews, Turkish Jews: the Alliance israélite universelle and the politics of Jewish schooling in Turkey, 1860–1925, Indiana University Press, p. 32, ISBN 0-253-35021-2
- Palestinian Private Property Rights in Israel and the Occupied Territories Archived 2014-07-14 at the Wayback Machine Stacy Howlett, Vanderbilt Journal of Transnational Law (Volume 34 number 1, January 2001, retrieved August 14, 2006)
- William Neilson, Hancock (1850). . Journal of the Statistical and Social Inquiry Society of Ireland. Dublin: Statistical and Social Inquiry Society of Ireland. 2: 1–11.