Have you ever lived somewhere, where the community constantly fluctuates, is mostly made up of people on a very low income, people come and go with little warning...
Its very unstable, chaotic, in shared houses its generally unpleasant - on housing estates it tends to lead to anti social behaviour, crime, which then makes it a place no one 'nice' wants to live, which means the 'not nice' people get dumped there more and more...
Which is why giving people lifetime tenancies (as long as they stick to their tenancy agreement, break it and you can be evicted) and encouraging a mix of financial backgrounds works better. You get a much stronger community, the bad uns have a desire not to shit on their own doorsteps, the good uns want to improve the area, keep things nice...
Putting peoples rent up because they have more income will absolutely stifle ambition, yep. They feel punished for trying harder/doing better. That may not be the intent but it absolutely will be the effect.