Let's Talk About Cities #1 – Gentrification
“One by one, many of the working class neighbourhoods of London have been invaded by the middle-classes—upper and lower. Shabby, modest mews and cottages—two rooms up and two down—have been taken over, when their leases have expired, and have become elegant, expensive residences ... Once this process of 'gentrification' starts in a district it goes on rapidly, until all or most of the original working-class occupiers are displaced and the whole social character of the district is changed.” 1
The above quote defined, for the first time, the term ‘gentrification’ - its main aspects being the displacement of residents of an area as well as the transformation of the area’s social character. In this post and the accompanying podcast episode, we delve a little deeper into the stages of gentrification and discuss some possible measures that can be taken to deal with its effects.
Rent gap theory
There are several different theories dealing with the topic of gentrification. For the scope of this post, we think it’s enough to present the basic economic forces at play with the rent gap theory. According to the rent gap theory, introduced by Neil Smith in 1979, an area is likely to undergo gentrification when the difference between the potential and actual value is big.2 This difference is called the rent gap. Gentrification oftentimes follows intentional disinvestment as a strategy to further increase the so-called rent gap and thus potential profits.
The process of gentrification
As the rents are typically low in areas that have undergone disinvestment, they attract people of lower income, such as students or artists that need studio spaces. This group of people leave their imprint on the area and create a demand for businesses like cafés or galleries. That results in an increased popularity of the area in other demographics including more well off people. When people with higher income move to the area, the economic basis for businesses changes further as does the tax income of the local government. Thus further improvements to the public infrastructure can be made and the new status of the area cemented. In this stage, investors might buy and renovate buildings and can therefore demand higher rents from the residents, alternatively force them to move out and make space for new customers.
Types of displacement
Displacement comes in different forms and can roughly be categorized in the following three. 3
Direct displacement: Residents are forced to move out because the rent increases
Exclusionary displacement: Housing choices for low-income residents are limited
Displacement pressure: Services or other kinds of support that low-income families rely on are disappearing from the neighbourhood
Methods of dealing with gentrification
There are some measures that can be implemented in order to prevent or lessen the process of gentrification. Direct action and organisation of residents are immediate options for those affected whereas changed laws, for example rent control or zoning laws, can be achieved through democratic institutions.4
The case of Berlin offers a good example of several of these methods being applied. Central districts like Neukölln, Prenzlauer Berg and Kreuzberg have been gentrified over the last few decades and as a response community groups have been formed to protest, share information and support as well as pressure politicians to action. It is debatable what success that has had, but a recent development - the introduction of a rent cap (Mietendeckel) - appears to be a promising method of preventing displacement by ensuring rents are not further raised.
1 Glass, Ruth. 1964. London: aspects of change. London: MacGibbon & Kee. p. 18-19
2 SFU - Simon Fraser University. .2000. The Rent Gap. URL: http://www.sfu.ca/geog452spring00/project3/m_rent.html (accessed February 2021)
3 Zuk, M., et al. 2015. Gentrification, Displacement and the Role of Public Investment: A Literature Review. University of California, Berkeley & University of California, Los Angeles. p. 26-28. URL: https://www.researchgate.net/publication/334638363_Gentrification_Displacement_and_the_Role_of_Public_Investment_A_Literature_Review (accessed February 2021)
4 National Low Income Housing Coalition. 2019. Gentrification and Neighborhood Revitalization: WHAT’S THE DIFFERENCE? URL: https://nlihc.org/resource/gentrification-and-neighborhood-revitalization-whats-difference (accessed February 2021)