1. Economics
August 14, 2017updated 03 Aug 2023 1:38pm

The other Waitrose effect: how gentrification is linked to rising evictions

By David Adler

The Royal Borough of Kensington & Chelsea has become the fishbowl of British inequality. On one side stands the skeleton of the Grenfell Tower; on the other sprawl hundreds of empty mansions. Since June, the council has faced harsh criticism for its failure to address the widening gap between them.

But Kensington & Chelsea is merely an extreme case of the rule – not an exception to it. As house prices continue to climb, the housing market is driving wide-ranging inequalities between property owners with security of tenure and property renters without it.

In a new report for Generation Rent, I showcase this inequality using what I call the ‘Other’ Waitrose Effect: the opening of a new Waitrose, I find, is associated with an increase in local evictions by between 25 and 50 per cent.

Waitrose is a national treasure. The supermarket has succeeded in balancing progressive labour-management relations with competitive pricing on a range of luxury, free-range and organic items. This broad appeal has driven the original Waitrose effect, increasing the value of local properties by an average of £40,000.

Homeowners rejoice. Their homes rise in value, but so do their lifestyles: they have access to Britain’s favourite supermarket.

But there are hidden costs for local renters. As house prices rise, private landlords see an opportunity to fetch a higher price from a sale or a higher rent from new tenants. To do so, they free up their properties with a Section 21 eviction – a “no-fault” eviction – by which landlords can remove their tenants without citing a grievance to the courts, on just two months’ notice. Section 21 evictions have been rising rapidly over the last few years as more landlords are emboldened by higher prices.

The findings of the new report suggest that Waitrose is having a significant impact on these Section 21 evictions. In the graph below, I plot the eviction trends from 2005 to 2015 across all English local authorities. As Waitrose stores open across the period, the gap between the two lines begins to widen. In the fixed effects estimations that I run in the study, I find that the opening of a single store is associated with a rise in evictions between 25 and 50 per cent.

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Waitrose is, of course, not directly to blame. The firm is part of a broader process of gentrification – both product and producer of growing affluence in a given neighbourhood. I use Waitrose in this report as a gentrification proxy in order to evaluate the negative externalities of such affluence on the local renter population.

The housing market in Britain is, then, becoming increasingly zero-sum. For homeowners, rising house prices represent fresh cash – they can remortgage to reduce their monthly outgoings or release equity to save for retirement. For renters, rising house prices represent deepening crisis – in turn, the property ladder moves further out of reach, and rental costs rise. The other Waitrose effect simply illustrates these zero-sum dynamics.

MPs from across the political spectrum now recognise the scale of Britain’s housing crisis, and there is near unanimity on the need for more government involvement in housebuilding.

But the political conservation rarely addresses the zero-sum dilemma: millions of British families rely on their homes as a vehicle for their prosperity, while millions of others struggle to afford their monthly rent. The Waitrose effects must be understood together – the housing market always has its winners and its losers.

There are several common sense reforms that can protect tenants without disrupting the market at large. Generation Rent is advocating a policy that forces landlords to reimburse tenants for Section 21 evictions, which would both provide immediate relief to struggling renters and discourage the use of the evictions in general.

To solve the broader housing crisis, though, we must end Britain’s addiction to house price inflation. Families should have enough financial security – high enough wages, large enough pensions – that they do not have to rely on their homes as an ATM for today or piggy bank for tomorrow. Property should not be a ‘better bet’ for retirement than a pension.

Waitrose, for its part, should bring neither prosperity to homeowners nor insecurity to renters. It should, instead, deliver decent jobs and quality groceries – to be enjoyed by all tenures.

David Adler is a post-graduate student in the Department of Politics and International Relations at the University of Oxford. He conducted this research on behalf of the campaign group Generation Rent.

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