More than 325,000 people living in supported housing and temporary accommodation in the United Kingdom can now increase their working hours without facing the previous sharp reduction in housing support under new rules that came into force on Monday.
The Department for Work and Pensions announced the changes on October 5, 2026, saying the reforms would particularly benefit people who previously faced financial barriers when taking on additional work.
Nearly 50,000 young people starting employment are expected to be affected by the changes.
New Rules Target ‘Cliff Edge’ Effect
Under the previous system, some residents received Universal Credit to cover day-to-day living costs while their housing support was provided separately through Housing Benefit.
Because the two benefits operated under different earnings rules, Housing Benefit could be reduced more quickly when residents started working or increased their hours.
This meant some people could find themselves financially worse off despite earning more.
The new rules change how Housing Benefit is calculated for working-age claimants living in supported housing and temporary accommodation.
The government said the new approach brings the treatment of earnings under Housing Benefit closer to that of Universal Credit.
Charities Welcome Housing Benefit Reform
Centrepoint Chief Executive Officer Seyi Obakin described the changes as a landmark development for young people experiencing housing insecurity.
He said young people had told the charity they often felt “trapped” because increasing their working hours, changing jobs or building savings could leave them financially worse off.
Obakin said the new system would allow young people in supported housing to retain more of their earnings as they increase their working hours.
St Mungo’s Chief Executive Officer Emma Haddad also welcomed the reform, saying the charity had seen cases where people faced difficult choices between earning more and retaining their accommodation.
She said employment could help people build financial resilience and independence while supporting them to maintain stable accommodation.
Government Introduces Five Income Disregards
The government said five new earned-income disregards would be introduced for working-age Housing Benefit claimants in supported housing and temporary accommodation.
The disregard values will be updated annually.
The government also said no group would be made worse off by the changes.
Prime Minister Andy Burnham said people should not have to choose between keeping a roof over their heads and working.
Minister for Social Security and Disability Sir Stephen Timms said the previous system had discouraged some residents from increasing their working hours.
He said the reforms were intended to ensure that people who work more hours are financially better off than remaining on benefits.
The regulations were laid before Parliament on July 6, 2026, and came into force on October 5.
