Market-value rents will push more into poverty

Research to be published this week shows that reflecting market values in social housing rents would generate rents that were "unaffordable by any measure" and would push tenants into the benefits trap.

The research carried out by Cambridge University's property research for the three major housing bodies - the National Housing Federation, the Chartered Institute of Housing and the Local Government Association - deals a blow to government plans to link rents to capital values in the forthcoming housing Green Paper.

The Green Paper will look at "strengthening the links between rents, and the size, location and condition of homes".

But the research, led by Dr Christine Whitehead, concludes that rents based on capital values would undermine the government's welfare to work agenda.

Instead it proposes a rent setting model that takes tenants' income into account and the proportion they spend on housing. Research by the federation shows this approach could take 100,000 housing association tenants off housing benefit and would cost the Treasury only £350m a year - or just over 3 per cent of the total housing benefit bill.

National Housing Federation director of policy Liz Potter said: "Rents need reform. They should reflect the quality of housing and services. But taking that to extremes will perpetuate social exclusion and put more tenants in the poverty trap. What we would like to see is a reformed rent structure which reflects an element of capital values and local earnings."

The research which is part of a long-awaited study into affordability fails to come up with a definition of affordability and argues that there is no single numerical answer to the question "what is affordable?".