The "Douglas Paradox" describes a situation where improvements to a rental property, while increasing the rent, don't necessarily increase the property's market value in a way that reflects the rent increase. This can happen due to factors like differing valuations between rental income and property value, or when certain improvements primarily benefit tenants rather than increasing the property's appeal to buyers.
We must think about the Douglas Paradox because fitting a luxury bathroom kitchen will increase the rent a tenant is willing to pay but it will not increase the capital value of the property.
by anonymous May 7, 2025
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