In the good old days, councils and housing associations built social rented housing – often called council housing. It was a simple idea in which rents were based on a formula that combined local wages and local property values so that, for much of southern England, rents would be set at around 50% of local market rents – even lower in very expensive areas. Social housing rents allowed people to work without being dependent upon housing benefit.

No more. Now, councils and housing associations have been told to replace social rented housing with a new product called, confusingly, affordable housing.

In a move worthy of George Orwell's Ministry of Truth, affordable rent will be higher than before, set at up to 80% of the local market rent. Across whole swathes of southern England affordable rented properties will simply not be affordable to people on low incomes.

Data on market rents is collected by the Valuation Office Agency. The average market rents for October 2013 show that if councils and housing associations were to charge 80% of market rates for a three-bedroom property in London, tenants would have to pay a staggering £655 a week in Westminster to £198 a week in Havering. Elsewhere in southern England typical weekly rent for a three-bedroom home would be £218 in Sevenoaks, £247 in Brighton, £233 in Oxford and £179 in Bristol. No family on a minimum or very low wage could hope to pay these rents without relying on housing benefit. It's only when you move out to places such as Thanet (£128 a week), Peterborough (£115) or Nottingham (£110) that rents start to become affordable.

Last year, even the Conservative Westminster council warned London mayor Boris Johnson that plans to set new rent levels at up to 80% of market rent would require council tenants in a three-bedroom home in the borough to have an annual income of £109,000 in order to be considered affordable. The council estimated that half its social rented households receive an annual income of less than £12,000 a year.

Even in the less illustrious London borough of Southwark, home to the Heygate estate, the rent for a two-bedroom flat would require an income of almost £44,000. Even if rents were set at 65% of market levels, which is the average amount expected, residents still would need to earn more than £35,000.

The background to the affordable rent policy is a desire to build more homes for less public money. Councils and housing associations bidding for funding to develop new affordable homes will have to show that they are bringing in other resources to fund housebuilding. That means selling off valuable properties, such as the £3m council house in Southwark, but also converting social rent houses to affordable rent houses when they become empty. For every affordable rent property that is built, one or more existing social housing property will be lost.

High rents across much of southern England reflect the over-heated property market, but to pretend that poor people will be able to take on a new affordable rent home in these areas without ending up trapped in benefit-dependence is disingenuous.

The HCA appears to accept this. Their prospectus says: "Government policy does not support the argument that only rents at or close to social rent levels are capable of meeting local needs – particularly when support for housing costs through housing benefit and universal credit is taken into account."

So, again, housing benefit will take the strain. But the consequence of this policy is the creation of thousands of new benefit-dependent tenants while the £24bn housing benefit bill will continue to soar. The government has rendered the word affordable meaningless.

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