I think it's a sensible policy. Ridiculous that people earning above average wages (and in some cases, WAY above) are living in subsidised social housing, while those on low pay can't find somewhere to live.
I think there should be a tapering off rather than a cliff-edge, so as not to disincentivise people to better themselves.
Those saying "are the HA going to spend money modernising the property?", well if they don't, you can move into another nicer property with the same market rent costs and live there instead. This will a) free up that HA property for a family on NMW in need, and b) if they HA can't rent it for the higher price then that will force them to either upgrade it to meet the market expectation the rent it or lower the rent.
Would make more sense if the extra income was ringfenced to provide more affordable housing, but if it goes back to the exchequer then maybe this is the Gov's long term plan (hopeful)...