Rent Gap Theory
Updated 2026-08-09
INTRODUCTION
English translation pending.
CORE DEFINITION
Rent gap theory, from urban geography, explains gentrification as a profit mechanism rather than a charity project. Each plot carries an actual capitalized ground rent, its value under present use, and a potential ground rent, what it would be worth after redevelopment. When the gap between them grows large enough, capital flows in to redevelop the land, raising prices and displacing the original residents. The tool lets an observer predict which neighborhood will next be upgraded by measuring the gap rather than by trusting official narratives about improvement.
SCAFFOLDING EFFECT
Reduce cognitive load
- Gap math: Estimate the present-use value and the redeveloped value, then treat their difference as the profit signal. - Block prediction: Rank districts by gap size to forecast where capital will arrive next. - Narrative check: When a project is pitched as improvement, verify whether the rent gap is the real motive.
Anchor fast decisions
Capital sits where returns are highest, and a wide rent gap is an unrealized arbitrage: the same plot is cheap under its present use and valuable under a better one. Redevelopers capture that difference, and their bidding then raises the ground rent, which lifts rents and prices throughout the block. Displacement follows not from malice but from the arithmetic of the gap closing.
MINIMUM ACTION
In progress 0/1Practice this model in one real situation:
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Neil_Smith_(geographerverified
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