From Gentrification to Sterilization? Building on Big Capital

Abstract

In a period of extreme inequalities, the speed and scale of capital flows into London constitutes a new economic process qualitatively different from that of gentrification. It is underpinned by the financialization of housing introduced in the 1980s, the policy of Quantitative Easing, the influx of corrupt money into the city and the growing role of private equity in real estate markets. Since the 2008 financial crash the “trickle-down” of land and property price rises has built on the existing shortage of affordable housing to create an acute crisis. Combined with the commercialization of housing benefit, inflationary pressures both top-down and bottom-up are the consequence. While the current influx of capital shares key characteristics with economic gentrification, its speed and scale is unprecedented. I propose that, since the 2008 crash, we have been witnessing a new phenomenon, which I liken to sterilization rather than gentrification.

Keywords:

• housing crisis
• extreme inequalities
• quantitative easing
• inflationary pressures
• gentrification
• sterilization

Acknowledgements

Many thanks to the AHRA “Housing and the City” conference for giving me the opportunity to re-visit Big Capital, and to the anonymous reviewers for providing invaluable feedback which was instrumental in grounding the argument.

Notes

1. Anna Minton, Big Capital: Who is London for? (London: Penguin, 2017).

2. The conference of the Architectural Humanities Research Association (AHRA), “Housing and the City,” was hosted by the University of Nottingham, UK, and held online in November 2020.

3. For a clear account of economic gentrification, see Tom Slater, “Gentrification of the City,” in The New Blackwell Companion to the City (Oxford: Wiley Blackwell, 2013), 571–585.

4. Minton, Big Capital, xvii.

5. See Leilani Farha, Report on the Financialization of Housing and the Right to Adequate Housing, United Nations Human Rights Office of the High Commissioner, 2017. Available online: https://documents-dds-ny.un.org/doc/UNDOC/GEN/G17/009/56/PDF/G1700956.pdf?OpenElement (accessed March 2022).

6. On the ever-changing status of Britain’s housing associations, see Chloe Stothart, “Housing Associations Returned to the Private Sector,” Social Housing, November 16, 2017. https://www.socialhousing.co.uk/news/news/housing-associations-returned-to-private-sector-53260 (accessed June 2022).

7. “Buy to let” is a British phrase referring to the purchase of a property specifically to rent it out and buy-to-let mortgages are typically for landlords who buy property for that purpose.

8. Richard Rowntree, “25 years of Buy to Let,” Paragon Bank Report, September 2021, 6. Available online: https://www.paragonbank.co.uk/resources/paragonbank/documents/mortgages/buy-to-let/25-years-of-btl-report (accessed November 2021).

9. Paul Watt and Anna Minton, “London’s Housing Crisis and Its Activisms,” City 20, no. 2 (2016): 207 and 209.

10. Quantitative Easing is a tool of monetary policy used by central banks as a method of quickly increasing the domestic money supply. It usually involves a country’s central bank purchasing longer-term government bonds as well as other types of assets, such as mortgage-backed securities (MBS).

11. “The distributional effects of asset purchases,” Bank of England Quarterly Bulletin 52, no. 3 (2012): 254 (1), Available online: https://www.bankofengland.co.uk/-/media/boe/files/news/2012/july/the-distributional-effects-of-asset-purchases-paper (accessed March 2022).

12. See the “Pandora Papers,” International Consortium of Investigative Journalists, https://www.icij.org/investigations/pandora-papers/ (accessed March 2022).

13. “London Property: A Top Destination for Money Launderers,” report by Transparency International UK with Thomson Reuters, 2016, 8. Available online: https://issuu.com/transparencyuk/docs/final_s041329_v8_hrnc__1_ (accessed July 2022).

14. Thomas Picketty, Capital in the Twenty-First Century, trans. Arthur Goldhammer (Cambridge, MA: Harvard University Press, 2014 [2013]).

15. This statistic is from the film Push, directed by Fredrik Gertten, WG Film, 2019.

16. See Richard Webber and Roger Burrows, “Life in an Alpha Territory: Discontinuity and Conflict in an Elite London ‘Village’,” Urban Studies 53, no. 15 (2016): 3039–3154.

17. See Theresa May’s Prime Ministerial speech on housing to set out changes to planning rules, 2018, Available online:

https://www.gov.uk/government/news/pm-speech-on-housing-to-set-out-changes-to-planning-rules (accessed March 2022); Minton, Big Capital, 39.

18. Malcom Morgan and Heather Cruikshank, “Quantifying the Extent of Space Shortages: English Dwellings,” Building Research & Information 42, no. 6 (2014): 710.

19. See Anna Minton, “Setting the Scene: Thirty Years of Regeneration in East London,” in Regeneration Songs (London: Repeater Books, 2018), 47–61.

20. Minton, Big Capital, 48.

21. See “Savills Residential Property Focus Q1,” Savills 2011, quoted in Luna Glucksburg, “A View from the Top: Unpacking Capital Flows and Foreign Investment in Prime London,” City 20, no. 2 (2016): 250.

22. Zone 3 is the third zone of the London Underground transport system; Zone 1 is Central London, Zone 2 the first ring of suburbs, Zone 3 the next. The zones are used to determine the price of fares.

23. For an exception, see Chaminda Jayanetti, “Benefits freeze will leave tenants across Britain facing rent arrears of £1,000,” The Guardian, March 13, 2021. Available online: https://www.theguardian.com/money/2021/mar/13/benefits-freeze-will-leave-tenants-across-britain-facing-rent-arrears-of-1000 (accessed May 2022).

24. Paul Johnson, “Doubling of the Housing Benefit Bill Is a Sign of Something Deeply Wrong,” Institute for Fiscal Studies, March 4, 2019. Available online: fs.org.uk/publications/13940 (accessed March 2022).

25. See Carl Mungazi, “Kitchen Floors for Beds and Fridges for Storage – Life of Misery in Crowded Flats,” Luton on Sunday, August 2, 2015. Available online: https://archive.org/stream/luton-on-sunday-2015-08-02/luton-on-sunday-2015-08-02_djvu.txt (accessed May 2022).

26. I Daniel Blake, directed by Ken Loach, Sixteen Films with eOne Films, Why Not Productions, Wild Bunch and BBC Films, 2016.

27. Bank of England, “What is Quantitative Easing?” 2021. Available online: https://www.bankofengland.co.uk/monetary-policy/quantitative-easing (accessed March 2022).

28. House of Lords Economic Affairs Committee, “Quantitative Easing: a dangerous addiction?” House of Lords, 2021. Available online: https://publications.parliament.uk/pa/ld5802/ldselect/ldeconaf/42/4202.htm (accessed March 2022).

29. “UK house prices end the year at a record high, with annual price growth in double digits”, Nationwide, 2021. Available online: https://www.nationwidehousepriceindex.co.uk/reports/uk-house-prices-end-the-year-at-a-record-high-with-annual-price-growth-in-double-digits (accessed March 2022).

30. Brett Christophers, “Mind the Rent Gap: Blackstone, Housing Investment and the Reordering of Urban Rent Surfaces,” Urban Studies 59, no. 4 (2022): 698.

31. United Nations Human Rights Office of the High Commissioner, news, “States and real estate private equity firms questioned for compliance with human rights,” 2019. Available online: https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=24404&LangID=E (accessed March 2022).

32. For a report on the details of the sale, see National Audit Office, Network Rail’s Sale of Railway Arches, Network Rail, Department for Transport and HM Treasury, 2019. Available online: https://www.nao.org.uk/wp-content/uploads/2019/05/Network-Rails-sale-of-railway-arches.pdf (accessed March 2022). See also Anna Minton, “Ruthless Private Equity Firms Gobble Up Property and Wreak Havoc on Tenants’ Lives,” The Guardian, September 20, 2019.

33. Aime Williams, A. (2018) “Blackstone Under Fire Over Push into UK Social Housing; Fears Private Equity Giant Will Use Financial Muscle to Outbid Non-profits,” Financial Times, May 11, 2018.

34. See iQ Student Accommodation, London, https://www.iqstudentaccommodation.com/london?year=2022-23&sorting=featuredBuilding (accessed June 2022).

35. Max Bergman, “How the United States should Respond if Russia Invades Ukraine,” Center for American Progress, January 25, 2022. https://www.americanprogress.org/article/how-the-united-states-should-respond-if-russia-invades-ukraine/ (accessed March 2022).

36. International Consortium of Investigative Journalists (ICIJ), Pandora Papers, 2021, Available online:

https://www.icij.org/investigations/pandora-papers/. For more detail on the transactions involving the Qatar ruling family, see Ahmed ElShamy and Emir Nader, “Pandora Papers: Qatar ruling family avoided £18.5m tax on London super-mansion,” BBC News Arabic, 2021. Available online: https://www.bbc.co.uk/news/world-58796553 (accessed October 2021). Stamp duty is a tax payable to the UK government when properties are bought, and is related to the price of the property.

37. “UK House Prices End the Year at a Record High, With Annual Price Growth in Double Digits,” Nationwide Building Society, December 2021.

https://www.nationwidehousepriceindex.co.uk/reports/uk-house-prices-end-the-year-at-a-record-high-with-annual-price-growth-in-double-digits (accessed March 2022).

38. For the average private sector rent, see the HomeLet Rental Index for April 2022, https://homelet.co.uk/homelet-rental-index (accessed May 2022).

39. Gov.UK. Universal Credit Local Housing Allowance rates: 2021 to 2022, https://www.gov.uk/government/publications/universal-credit-local-housing-allowance-rates-2021-to-2022 (accessed March 2022).

40. Action on Empty Homes, “Nobody’s Home: How Wealth Investment Locks Londoners Out of Housing,” September 2021. https://www.trustforlondon.org.uk/publications/nobodys-home-how-wealth-investment-locks-londoners-out-of-housing/ (accessed March 2022).

41. See Sam Bright, Fortress London: Why We Need to Save the Country from Its Capital (London: Harper Collins, 2022).

42. Minton, Big Capital, xiii.

43. Ruth Glass, “Introduction,” in London: Aspects of Change, eds. Ruth Glass and the Centre for Urban Studies (London: MacGibbon and Kee, 1964), xviii-xix.

44. Friedrich Engels, The Housing Question, ed. C.P. Dutt, (London: Lawrence and Wishart, 1936 [1872]), 23. See also David Madden and Peter Marcuse, In Defense of Housing (London: Verso, 2016).

45. See John Davis, Waterloo Sunrise: London from the Sixties to Thatcher (Princeton, NJ: Princeton University Press, 2022).

46. See Neil Smith, “Toward a Theory of Gentrification: A Back to the City Movement by Capital, not People,” Journal of the American Planning Association 45, no. 4 (1979): 538–548; Neil Smith, “Gentrification and the Rent Gap,” Annals of the Association of American Geographers 77, no. 3 (1987): 462–465; Neil Smith, The New Urban Frontier: Gentrification and the Revanchist City (London: Routledge, 1996); David Ley, The New Middle Class and the Remaking of the Central City (Oxford: Oxford University Press, 1996); Loretta Lees, “Super-Gentrification: The Case of Brooklyn Heights, New York City,” Urban Studies 40, no. 12 (2003): 2487–2509; Loretta Lees, Tom Slater and Elvin Wyly, Gentrification (New York: Routledge, 2008); Loretta Lees, Hyun Bang Shin and Ernesto Lopez-Morales, editors, Global Gentrifications: Uneven Development and Displacement (Bristol: Policy Press, 2015); Tom Slater, “The Eviction of Critical Perspectives from Gentrification Research,” International Journal of Urban and Regional Research 30, no. 4 (2006): 737–757; Tom Slater, “Gentrification of the City,” in The New Blackwell Companion to the City (Hoboken, NJ: Wiley Blackwell, 2013), 571–585; Tom Slater, “Planetary Rent Gaps,” Antipode 49, no. 1 (2015): 14–137.

47. Neil Smith, “Toward a Theory of Gentrification.”

48. See Tom Slater, Shaking Up the City: Ignorance, Inequality, and the Urban Question, Oakland, CA: University of California Press, 2021 – Slater sees the earlier virulent debates as being overstated.

49. Lees, “Super-gentrification: the Case of Brooklyn Heights” and Tim Butler and Loretta Lees, “Super-Gentrification in Barnsbury, London: Globalisation and Gentrifying Global Elites at the Neighbourhood Level,” Transactions of the Institute of British Geographers 31, no. 4 (2006): 467–487.

50. Paul Watt, “‘It’s Not for Us:’ Regeneration, the 2012 Olympics and the Gentrification of East London,” City 17, no. 1 (2013): 99.

51. Ibid., 102.

52. See https://www.rightmove.co.uk/properties/122436167#/?channel=RES_NEW (accessed May 30, 2022).

53. Minton, Big Capital, 51. This figure is derived from Freedom of Information requests (FOIs) and is documented here: http://heygatewashome.org/displacement.html (accessed May 30, 2022).

54. Ruth Glass (ed.), “Urban-Rural Differences in Southern Asia: Some Aspects and Methods of Analysis,” UNESCO Research Centre on Social and Economic Development in Southern Asia, 1964, quoted in Lees et al, Planetary Gentrification, 1–2.

55. See Jennifer Robinson, Ordinary Cities: Between Modernity and Development (London: Routledge, 2006); Jennifer Robinson, “Cities in a World of Cities: The Comparative Gesture,” International Journal of Urban and Regional Research 35, no. 1 (2011): 1–23.

56. Lees et al, Global Gentrifications.

57. D. Asher Ghertner, “Why Gentrification Theory Fails in ‘Much of the World’,” City, 19, no. 4 (2015): 552, quoted in Matthias Bernt, “Very Particular or Rather Universal? Gentrification Through the Lenses of Ghertner and Lopez-Morales,” City, 20, no. 4 (2016): 637.

58. Lees et al, Planetary Gentrification, 30.

59. Henri Lefebvre, The Urban Revolution (Minneapolis, MN; London: University of Minnesota Press, 2003), 159, referenced in the introduction to Lees et al, Planetary Gentrification.

60. On the rentier economy, see Picketty, Capital in the Twenty-First Century and Slater, Shaking Up the City.

61. See Lees “Super-Gentrification: The Case of Brooklyn Heights, New York City” and Butler and Lees, “Super-Gentrification in Barnsbury, London.”

62. Stuart Hall, Chas Critcher, Tony Jefferson, John Clarke and Brian Roberts, “Preface” to the 35^th anniversary edition of Policing the Crisis: Mugging, the State and Law and Order (London: Red Globe Press, 2013), xiv–xv.

63. Bank of England, “What is Quantitative Easing?” 2021.

64. Minton, Big Capital, 75.

65. See J. Douglas Porteous and Sandra E. Smith, Domicide: The Global Destruction of Home (Montreal: McGill-Queen’s University Press, 2001) and J. Douglas Porteous, “Topocide, the Annihilation of Place,” in Qualitative Methods in Human Geography, ed. J. Eyles and D. M. Smith (Cambridge: Polity Press, 1988), both referenced in Adam Elliot-Cooper et al, “Moving Beyond Marcuse: Gentrification, Displacement and the Violence of Unhoming,” Progress in Human Geography 44, no. 3 (2020): 493.

66. On the privatization of urban space, see Anna Minton, Ground Control: Fear and Happiness in the 21st Century City (London: Penguin, 2009).

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Anna Minton

Anna Minton is a writer, journalist and Reader in Architecture at the University of East London. Her first book, Ground Control, was published in by Penguin in 2009. Big Capital, also published by Penguin, came out in 2017. The Royal Commission's Fellow in the Built Environment between 2011 and 2014, she is a regular contributor to the Guardian and Financial Times and a frequent broadcaster and commentator.