This is an example of the principle of unearned increment.
Unearned increment refers to the amount by which land increases in value because of generally improving conditions in the area, and not because of any particular efforts by the property owner.
When Rachel bought her house years ago, the price of the house was $100,000. Over the years she made improvements worth $25,000.Thus, the house is now valued at $275,000. Which is an unearned increment.
For instance, the value of a property increases because of the population increase in that particular region.
Hence, unearned increment is an increase in the value of land or other property through no expenditure by the owner.
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