The homestead principle is a theory of how a fresh, or new, resource becomes legitimate property. The principle states that any resource that has never been mixed with any person's labour, has never been occupied by anyone is unowned. It may only become legitimate property if a person occupies it or transforms that unowned resource through labor. Appropriating a new resource by any other method is considered unethical.
There is not a requirement that a resource be in regular use for the proprietor retain the right to control, but simply that it has been transformed once through labor. Since property rights entail the right of the owner to transfer ownership to someone else, or discard it, the homestead principle does not require that a purchaser, giftee, or finder mix his labor with the land in order to own it. Thus, "absentee ownership" and rent is permitted.
Together with the principle of self-ownership, the homestead principle forms the basis of libertarian philosophy. The homestead principle is seen by libertarians as consistent with their opposition to initiatory coercion, since only land that is unowned can be taken. If something is unowned, there is no one the original appropriator is initiating coercion against. And, they do not think mere claim creates ownership.
Murray Rothbard says: "All existing property titles may be considered just under the homestead principle, provided (a) that there may never be any property in people; (b) that the existing property owner did not himself steal the property; and particularly (c) that any identifiable owner (the original victim of theft or his heir) must be accorded his property" (in Justice and Property Rights)
The idea that labour input creates property is by no means new, and is in fact directly attributable to the writings of John Locke. In 1690, Locke published "A Essay Concerning the true original, extent, and end of Civil Government", commonly known as his "Second Treatise On Government" , in which he deals with, among other subjects, that of property. From his "Second Treatise":