What’s gentrification got to do with it?
A word that is often banded around in the media or as part of a lighthearted discussion in the pub, ‘Gentrification’ is a term that has been picking up traction for decades, and rightly so. While there’s some confusion about its meaning, the term refers to conforming a housing district, area or community to middle-class taste by regenerating, with renovation a key aspect. Where it is now and why it started are important subjects, but it’s also just as useful to start with when it began. People talk about it today like it’s a new wave of hipsters, the rich and powerful who are forcing out the less wealthy and lower classed citizens, but let’s zoom in on its origins. Since the 1960’s in the UK, the insecurity after the war was beginning to settle in Europe, but there was still plenty of issues to address.
The UK needed stability, financial strength and unity to overcome the aftermath of World War Two. Housing in London, plus many other notable areas needed a serious revamp after the damage to several key landmarks, not to mention the vast amount of communities. Back then, houses were at a much cheaper price, bringing with it added work to make a house a home. Nevertheless, keen-eyed investors saw an opportunity in an impoverished neighbourhood of segregated with usually ethnic backgrounds, deciding to leap into action, fixing it up as quick as possible to claim a hefty return. In modern society, it’s seen as a taboo subject – us against them, left vs right and poor fighting for social standing with those better off.
Right now in the UK, there are several key cities that are seeing a gentrification boom, with housing prices going up, the lower class sometimes forced to start looking for a new home following section 21 (more on that later) and a Starbucks on every corner. According to a study from GoCompare in 2018, Cambridge takes the top spot for the most gentrified city, with the likes of Reading and Portsmouth in the south of England in the top five. This is roughly based on the increases in salary, cultural investment, number of trendy coffee shops and various other markers. But when you think of ‘Gentrification’ – turning a runned down area with little social activity into a bustling vibrant space where the cocktail bars and stylish cinemas are readily available, you instantly think of the English capital. London now has a population of roughly nine million, increasing by around 120,000 each year. It’s a city that never sleeps, there’s so much to see for working professionals, families and visitors from afar. In the past twenty years, prices in London have multiplied six times, Halfix mortgage indicator suggests. So which areas is this in? Surely it’s your typical affluent areas, such as Kensington, Belgravia or Westminster.
What started off as those areas has now multiplied into boroughs you wouldn’t even think of thirty or forty years ago, with Hackney, Brixton and Lambeth to name a few. Take a walk through Camden market or Shoreditch and you see it has turned into the go-to place for hipsters looking for a good time. Prices have been steadily rising since the Second World War, where houses cost a cool £5,000. Now they fetch close to half a million on average, pushing those who can’t afford it into long commutes or social housing. Depending on whether you look at the glass half empty or half full, it can have a remarkable affect on the market and those involved. From the landlords perspective, you’re running a business. To meet mortgage costs in an expensive city, added fees which have been introduced such as the Tenant Fee Act and an increase in Stamp Duty to 5% for a house worth between £250,000 and £925,000, to stand any chance you need to ask for more from your tenants.
Gentrification is not a new concept, but areas like Shoreditch and Hackney have seen a wave of popularity, often promoted by celebrities, as the cool new trend. Actor Idris Elba for example was born in Hackney and has pushed for the regeneration of a typically impoverished area where crime has been statistically high, with a whopping 568% increase in value over 20 years. Sadly, that has forced those who can not stump up that price away from the area they have called home for years, staying loyal to an area that needed help. Where do buyers stand in this debate? It depends on your budget essentially. London is always going to be a desirable area to live, with so many exciting jobs on offer in the capital. It’s becoming increasingly difficult for first time buyers to purchase a home in the capital – near on impossible unless you save, save and save some more. Now people are moving away from the inner city to outer boroughs, so basically the pattern is shifting between where is a safe district to live and where you can make a reasonable living.
If you plan on renting, you go where the affordable price is. Gentrification has created a more even playing field, where Hackney catching up with Richmond as a interesting place to settle. It depends on your preference on people, because in London there’s somewhere to suit everybody. To make room for gentrification, Landlords in the past have typically called upon Section 21 as a way to shift out tenants to make way for the upper class. It is generally frowned upon by general society because it gives a tenant only two months to look for a new place where they have originally felt settled – with no reason needed why they are moving them out other than to make a few more bucks – but there’s also the positive side where it has turned some truly poor parts of the capital into a space that needed regeneration and add some style.
Gentrification does not have to be seen as some sort of Robin Hood project – taking from the poor to give more to the rich – because London and many other cities around the UK needed freshening up. The likes of Brighton, Manchester and Bristol have seen an upward trend in tourism, with Manchester in particular seeing an increase in housing prices because of the relocation of the BBC and an upgrade to Salford Quays, increasing rental costs by 38% in the past five years. It does unfortunately bring unrest in local communities, but you have to adapt to the market to survive. In the future, the removal of Section 21 has been discussed, with plans to abolish that completely expected by late 2020/early 2021, so that helps tenants a little more. Gentrification will see prices continue to rise, but the impact of Brexit could see house prices drop also. The market is slightly uncertain currently, but now is a good time to invest in a gentrified area that is booming, because of its current popularity. Overall, it can only be a good thing. It can make the streets cleaner, reduce crime, to tourists run down areas will suddenly look appealing and throughout the UK, it can help to boost the economy.