Gentrification: the Good, the Bad and the Ugly

Plato once observed, “Every city, however small, is in fact divided into two: one is the city of the poor, the other of the rich.” Gentrification, a term coined by Ruth Glass in the 1964 book London: Aspects of Change, is the process of these two cities meeting. To those who defend it, gentrification is the replacement and regeneration of the deprived “city of the poor” into an extension of the city of the rich; to its opponents, it is the displacement of working-class people and the destruction of their communities for the benefit of the rich – the “city of the poor” does not disappear, simply move elsewhere.

It can be argued that the process of gentrification is both beneficial and necessary as it is inextricably linked with urban renewal and socio-economic improvement.

One relatively uncomplicated benefit of gentrification is its impact on the environment. Urban renewal sees improvement upon existing land improve rather than the expansion of the rural-urban fringe through the development of greenfield sites and the concordant destruction of natural environments and habitats. Furthermore, many urban renewal programmes increase urban greenspace in themselves. For example, the Olympic Park in Stratford, formerly a 560-acre brownfield site, now contains vast green space, with 6.5km of waterways and habitats for many animals, including at least 60 species of bird.

The main advantages of gentrification, however, are economic. The spending of new residents with higher incomes injects money into the local economy. Small businesses can then re-invest this income and other companies are encouraged to move in by the prospects of greater revenue. This can improve the quality of social life in the neighbourhood as there are more recreational activities, such as going to one of the trendy cafés, bars or restaurants with which gentrified areas are so often associated. Furthermore, the expansion of business opportunities also creates employment, improving the economic wellbeing of the community. This attracts more businesses, investors and high-income residents, creating a positive feedback loop.

The built environment is also improved by gentrification. Private homeowners with high incomes moving into deprived areas, often into houses that have fallen into disrepair, may decide to refurbish their residence, as may investors looking to sell on the property for a profit. Increased public funding also allows for improvements in infrastructure and the quality of government-funded buildings.

These improvements may seem to not do much for existing residents on lower incomes, but public services also benefit from gentrification. All of the above economic and social improvements lead to the neighbourhood becoming a more desirable place to live, driving up property values: the main source of tax revenue for local authorities is council tax, which is assessed on property values. Therefore, the higher house prices also increase the public funding available for the area, leading to improvements in education, policing and infrastructure, among other things, which is especially beneficial for those on lower incomes who remain.

However, there is an argument to be made that, in spite of all the benefits gentrification may bring, it is harmful to the existing residents and communities in these neighbourhoods – and if ‘improving’ the quality of life in these areas harms their residents, then one might say it has not improved living standards but merely moved the problem.

Far from being economically beneficial, it could be argued some of the practices associated with gentrification are in fact predatory. Investors who see gentrification occurring in an area may buy houses at cheap, pre-gentrification prices to be rented out and sold on for a profit later: this does not even necessarily involve refurbishment, since the location of the house becoming more desirable is enough to increase the value of the house. In fact, investor demand can stimulate an increase in property values in itself. These investors do nothing to contribute to the development of the area and yet reap gentrification’s rewards.

There are also worries that homes bought by investors or those buying them as secondary residences may be left unoccupied, creating ‘ghost towns’. For example, various estimates place the number of empty homes in London at around 80,000. This is detrimental to local businesses as they are paying high rents for floor space that has its price artificially inflated by owners of homes that are not potential customers. In areas that are holiday destinations, such as Cornwall, this can be particularly problematic as there are few locals to pay for goods all year round and so firms become overly reliant on seasonal income.

One might think that these increases in property value are still beneficial, even if investors are taking advantage of them. However, as urban planning scholar Stacey Sutton points out, the increase in cost of living caused by rocketing property values displaces people and destroys communities both directly and indirectly.

Direct displacement from gentrification is when the price of rent increases due to higher property values and poorer families are priced out of their homes. There are previous residents, such as those who already own their homes or who live in social housing, who will not be directly affected by rising rents. However, they still may be indirectly displaced due to financial considerations. Rises in rent affect local shops just as much as residential tenants, and therefore their prices, in order to pay their rents, effectively creating inflation on a local scale. This increase in prices results in less people being able to afford necessities, and so lower-income households decide to move elsewhere.

Another form of indirect displacement is a snowball effect created by the exodus of previous residents from areas that are gentrifying. These residents may be able to absorb the economic impact of gentrification; however, they decide that, as the old community is displaced and the character of the area is lost and replaced, they no longer want to stay. Ironically, the economic impacts on poorer residents can tear the social fabric that may have initially made the area desirable in the first place.

Gentrification also decreases social diversity, with some pejoratively calling the process ‘social cleansing’. The basis for this claim is that minorities are disproportionately displaced, with many of the newcomers to gentrified neighbourhood being white. The March 2021 Sewell Report found that 28% of black households in Britain were on persistently low incomes, compared to 12% of white households. Furthermore, only 35% of black households own their homes, compared to 62% of white households. This shows that people of a black background are more susceptible to the economic pressures of gentrification.

Around London and other metropolitan areas there is an overall trend of increasing house prices. Since 1995, house prices in London have risen by over 600% to almost three times the national average.  The Runnymede Trust devised a gentrification index for London, showing that Tower Hamlets, Wandsworth and Hackney. 

The pressure caused by gentrification in London has been a source of rising tension. Shoreditch is one of the most notorious neighbourhoods in the UK for its recent gentrification, and this is supported by the Runnymede Trust’s analysis as it forms the southern part of Hackney, one of the most gentrified London boroughs from 2010 to 2016. In September 2015, the ‘Cereal Killer Café’ in Shoreditch sparked protests with its rise in prices, with 200 rioters who saw the café as “a symbol” of a bigger issue, with the rioters stating, “We don’t want luxury flats that no one can afford, we want genuinely affordable housing. We want community.”

The recent COVID pandemic has had an as yet unknown effect on gentrification. Some have argued that the pandemic has created ‘degentrification’ in urban areas, whilst others argue that the pandemic will have the opposite effect. As more people work from home, employees no longer have to live close to their work, removing the pressure to find cheap housing in the city that often starts the gentrification process and thus reducing its rate in urban areas.

However, Paul Ong, an expert on urban planning, believes that this short-term ‘degentrification’ will lead to greater gentrification over time, especially in communities that are already poorer: “the COVID-19 recession is disproportionately hurting minority businesses, making their communities more vulnerable to gentrification pressures than they already were before.” This suggests that as small businesses, particularly in poorer and more socially diverse areas, are damaged by the pandemic, demand for commercial real estate will fall and so will rents. This will make the area more attractive to external investors looking to turn a profit by investing early, thereby starting the gentrification process.

Expectations in rural areas are less ambiguous, where COVID is expected to increase gentrification. With the introduction to remote working many have had, those from cities who no longer have to commute to their office may decide to relocate to the countryside, driving up housing demand and property values. Ultimately, these predictions on the potential impact of COVID on gentrification are just that, and time will be needed to fully reveal its effects – and even then, it may be difficult to determine what is a consequence of COVID or of other factors.

To conclude, gentrification can bring an array of benefits to poorly-developed areas, stimulating the economic development of communities. Gentrification can be seen as an essential process to provide residents with a better quality of life. However, the results of these benefits may be short-lived, as gentrification can widen the gap between the rich and the poor in the city, resulting in long-term social deterioration and putting pressure on the people who are displaced.