Gentrification and its impacts

The term gentrification was first coined by Ruth Glass in 1964 and its first case in London started during the 1960s. The term was used to describe the “invasion” of traditionally working-class neighbourhoods by middle and upper-class residents (Ilic 2019). Gentrification proves itself to be a booming opportunity for the wealthy, yet a nightmare situation for the poor. In this essay, I would like to explore the impacts that gentrification has had, is having, and will continue to have on the UK housing market, through an economic lens. I will delve into key topics around the situation, including displacement, investment and employment along with different gentrification ideologies such as Supply Side Gentrification and the Marxist interpretations on the topic.

Gentrification has always been present in the UK, particularly in London during the 1960s, where perhaps the best-documented occurrence was in Barnsbury, South West Islington. By the 1950s Barnsbury was one of the world’s worst slums, but just 10 years later, it had transformed into an up-and-coming booming town, where middle-class workers who were returning from the war kicked out the working-class occupiers. There are several explanations behind this, ranging from mortgage and tax relief, rent control and state subsidies through improvement grants; all of which contributed to the middle-class population in the area expanding and eventually eclipsing the working-class (Legg 1984).

But how does gentrification affect the UK housing market? We can see the effects when we take a look at how it raises house prices. According to the hedonic pricing model, proximity to a gentrified area raises house prices by 6 to 8%, and this seems to be consistent across these areas. This leads to the phenomenon known as ‘exclusionary displacement’ caused by the displacement of lower income households from the area, altering the area’s community dynamics, bankrupting local businesses and forcing cultural shifts. All of these are incredibly impactful but perhaps the main effect is the displacement of the local population and this occurs when the cost of living in an area reaches a point that is no longer financially viable for the lower income residents, effectively forcing them to leave. This is done directly through an increase in house prices via an increase in demand pushing up the equilibrium price, but also indirectly as there is a change in local businesses where many independent stores are replaced by corporate behemoths such as Starbucks and Costa, essentially catering to the new occupants, with much higher prices and little to no regard for the old residents, this not only erodes the local economic activity but also destroys communities that will have built up around these local stores and the residents in the area.

Supply side gentrification refers to the case where socio-economic factors such as crime and poverty drive down the price of housing in a certain area and make it more enticing for developers to move in and create an affluent neighbourhood, increasing the value greatly. This refers to the supply of housing changing in areas with more and more struggling places being renovated for higher value use, causing gentrification in the process. Supply side gentrification overpowers the less fortunate, raising the rent in their area to a price they simply cannot afford to pay, effectively kicking them out of their homes, all for the benefit of the developers who can make eye-watering amounts of profit off buying cheap land and converting it to expensive housing. Therefore this case of gentrification is especially cruel and exploits the lack of power that the lower income residents have to essentially overpower them and build where their community once thrived. This leads to many people being displaced and communities being torn apart, reducing the area’s cohesion and connection between people along with eradicating any trust the residents may have had in the council.

Another view on gentrification which I find particularly intriguing is the Marxist interpretation of the topic, especially of capitalism in gentrification in the modern era. The school of Marxism provides the view that gentrification is more likely to occur at a larger scale in less developed areas. This can be explained through Neil Smith’s rent gap theory which refers to the difference between current ground rents and the potential ground rents that capitalists could gain through redevelopment. This ties in with the Marxist argument that capitalism has led to space becoming a commodity to be bought, sold and exploited for profit and this leads to the owners prioritising exchange value over the practical and social needs of the residents (Kichko 2020). Along with this, gentrification often uses terms such as ‘revitalising’ or ‘cleaning up’ neighbourhoods and marxists argue that this often makes gentrification seem inevitable or desirable rather than a choice that serves only the upper class’s interests. Overall, the Marxists see gentrification as a process of capital accumulation to benefit the wealthy and disregard the poor.

The government often has a part to play in gentrification and its spread, this can be seen in effect when we look at implications of the UK Secretary of State’s decision not to overturn the 2016 Planning Inspectorate’s recommendation that Southwark Council should not be allowed to compulsory purchase those homes on the Aylesbury Estate which residents had not already vacated via negotiation. This decision was controversial as it meant that while tenants would be compensated financially for the loss of property, they would not be adequately compensated for losing their home (Hubbard 2018). This one choice enabled the growth of gentrification which consumed the area, evicting people from their homes. The council did nothing to stop this; in fact, they encouraged it as it provided them with a more profitable development which benefited both them and those more financially comfortable. Communities were torn apart, people were left without homes and the council grew ever-distant from its citizens all due to a selfish decision from a council seeking to exploit their residents. Gentrification does not have to be a curse to society; it is possible to improve an area and for all parties to emerge happier. However, this often does not occur due to the lack of regulation within the UK. A mere glance into the heart of London unveils numerous billion-pound investments that have taken the place of homes and torn apart communities, though unfortunately this process is showing no signs of halting as land grows ever more scarce by the second.

In conclusion, gentrification is a two-sided coin. On one side it presents a golden opportunity, one filled with riches for the affluent; on the other, it is a nightmare, a symbol of homes being stolen away, leaving inhabitants helpless without a place to stay.

Gentrification has a plethora of effects, ranging from being a slight irritation to councils to being a devastation to low-income individuals, caused by a variety of factors such as land scarcity and capital accumulation for the rich.

Though there is certainly a problem, not much is being done about gentrification; there are no effective solutions in place by the government or local councils and this is why I believe that gentrification is not going to stop plaguing the UK any time soon, in fact, due to an increasing population and growing demands, I believe that gentrification will become commonplace and its effects on the UK housing market will be nothing short of extraordinary.

References

• Ilic, L. , Sawada, M. and Zarzelli, A. “ Deep mapping gentrification in a large Canadian city using deep learning and Google Street View.” PLOS ONE, 14(3), 2019, https://doi.org/10.1371/journal.pone.0212814. Accessed 12 Nov. 2024
• Charles Legg, and Judith Allen. “The Origins of Gentrification in London.” History Workshop, no. 17, 1984, pp. 164–66. JSTOR, http://www.jstor.org/stable/4288552. Accessed 12 Nov. 2024.
• Sergey Kichko, “Competition, land prices and city size”, Journal of Economic Geography, Volume 20, Issue 6, November 2020, Pages 1313–1329. Oxford academic, https://doi.org/10.1093/jeg/lbz037. Accessed 18 Nov. 2024.
• Phil Hubbard, Loretta Lees, “The right to community?”, City, Vol. 22, no. 1, pp. 8-25, Researchgate, https://doi.org/10.1080/13604813.2018.1432178. Accessed 18 Nov. 2024