From article in Telegraph:
In what is being described as the biggest shake-up in housing policy since the Second World War, a host of other policies designed to ensure more people receive housing on the basis of need will be unveiled.
But the most controversial is the plan to end the current situation that means tenants effectively have a “council house for life” if they reach the top of the waiting list, even if their personal situation changes and they can afford to buy privately.
In an attempt to end the era of heavily subsidised rents, the Coalition’s new system will lead to tenants paying as much as 80 or 90 per cent of the market rate.
“This is still about there being affordable rent, but it needs to be more realistic. At the moment, if you get a council house you are really winning the jackpot,” said a source.
“In terms of the rent you pay it is very, very heavily subsidised. You may pay only a third or a half of the market rate.”
Lower down the article it is indicated that some of this will apply only to new council tenants. It would indeed be a massive upheaval – a political dynamite – to raised rents at all existing properties to a market rent and, at the same time, to limit housing benefit to £500 a week. That would mean evicting thousands of tenants who could not pay. So I assume it will all be for new tenants. The detail on this will be very important.