L&T Archive 2003-2014

Twenty years' purchase.
In Response To: Value of Estates ()

I can't think of an example in JA's novels where the capital value of an estate is stated rather than the annual income the estate would generate. My understanding is that stating the annual income from an estate rather than it's capital value was a very widespread if not universal practice at that time.

However, I think that the capital value would be obvious if the annual income from the estate was known.

The capital value was generally assessed as the amount of income the estate would yield over a twenty year period.
The expression "twenty years' purchase" was in use in relation to the value of land over a very long period, at least from the 15th century to the end of the 19th century. (Try Googling "twenty years' purchase" and you will see what I mean.)

As an example, we are told that Mr Bennet has "an estate of two thousand a year". (P&P ch.7) If Longbourne had not been entailed and Mr Bennet had been free to sell the estate, he would expect to get around £40,000 for it. I think this ratio of income to capital value was widely understood, so stating the income per year was effectively the same as stating the capital value.

Land was a particularly safe investment which could be expected to yield about 5% a year. This was about the same or a bit more than the yield on Government Bonds at that time.

I hope that helps.

A post from the L&T archives about sources of upper class incomes is linked below.

Messages In This Thread

Value of Estates
Twenty years' purchase.
Thank you for the informative post. nfm
Indebted to you for a great post !
Income, or profits?
Taxes
Income Tax 1799-1815
Thank you!
Price of Estates