Jono, with respect, what you term 'market rent' is not the applicable issue: The "Affordable Rent" Model has an explicit definition and this is 'gross market rent' (GMR). This iss detailed in the Affordable Homes Programme Framework (AHPF) document released by central government
The current GMR on a national basis is £713pcm (and rising weekly) and gives a GMR weekly rent of £164.55.
The national average unregulated private tenancy HB in-payment figure is £113.78 or 69% of GMR
The national average regulated private tenancy HB in-payment figure is £79.45 or 48% of GMR
The national average in-payment for all social housing figure is £76.17 (46% of GMR
The national average HB in payment for council properties is £71.14 (43% of GMR)
The national average HB in-payment figure for housing associations is £80.11pw (49% of GMR)
The above figures from SBHE official HB statistics
These reveal that regulated private tenancies attract less HB income than housing associations. We have to assume that regulated private lets break even or make a small profit as they would be withdrawn from the market. Yes they may well have been bought many years ago and mortgage paid off, but this just shows that private letting is a long-term investment that can provide profit to the owner.
The unregulated private housing rental market (at £113.78) charges the public purse 43% more than the regulated private rental properties at £79.45.
The much vaunted private market that is so much more effcient than the wasteful and poorly managed public sector (or so we are told) is on a short-term gravy train that becomes a long-term one and all at the public purse expense. Extrapolating the statistics reveals that if the vast majority of unregulated PSL tenancies were paid at the same rate as the regulated ones then the public purse would save £2.59 billion pounds each year.
Yet instead due to PSL tenancies attracting benefit rising by 50% over the past couple of years from 1m to over 1.5m the overall HB bill has rocketed (both Labour and now the coalition) have done nothing about this and HB bill now stands at £22.345 billion and rising by £3.8 million per day.
The question of "affordability" is therefore misframed. Its not whether tenants can afford the current or proposed system, its whether UK plc can afford it.
Even the coalitions HB reforms announced in June 2010 expected onlly a "near;y £2bn per year saving" from reforms and already the current bill is £1.87bn higher than they inherited and will be £5.3 billion above their £18 billion target figure when the first HB reforms come into play in January 2012.
UK plc cant afford to not regulate PSLs and the laissez faire free market approach to them that shapps announced in June 2010 (ie non-regulation) sees UK plc paying £3.27bn more per annum to them for mostly inferior properties and inferior service levels than the same number of council properties.
Its not a free market its an unregulated one and those are chalk and cheese and the unregulated private market is on a massive gravy train at the tax payers expense.
Regardless of which political party created it or its conditionss, it needs to change and the current official policy of inaction cannot be sustained.