UK Residents in Supported Housing Can Work More Without Losing as Much Housing Support

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 sharp reduction in housing support that previously left some residents financially worse off. The change took effect on Monday, October 5, 2026, after new Housing Benefit rules came into force. The reforms are designed to remove what the UK Government described as a financial “cliff edge” in the benefits system, where some people could lose housing support faster than their earnings increased when they moved into work or took on additional hours. Under the previous system, some working-age residents in supported housing and temporary accommodation received Universal Credit to help with their general living costs while receiving Housing Benefit separately to cover rent. Because the two benefits operated under different earnings rules, some claimants could find that increasing their income caused their Housing Benefit to fall sharply. In certain circumstances, the resulting reduction could outweigh the additional money earned from working more. The new rules introduce additional earnings disregards for eligible Housing Benefit claimants, allowing part of their employment income to be ignored when their housing support is calculated. Who will benefit from the changes? The reform is specifically aimed at working-age people living in supported housing and temporary accommodation. This includes people whose accommodation provides additional support, as well as people living in temporary accommodation arranged by councils. The Department for Work and Pensions said the measure will benefit more than 325,000 residents, including nearly 50,000 young people who are starting employment. The government initially estimated that around 300,000 households would benefit when the policy was announced in July. The final government announcement on October 5 put the number of affected residents at more than 325,000. The changes do not mean that Housing Benefit will remain unchanged regardless of earnings. Instead, they are designed to reduce the unusually sharp loss of support that could occur when claimants moved from receiving both Universal Credit and Housing Benefit to relying primarily on Housing Benefit. New earnings disregards introduced Under the new rules, five different weekly earnings-disregard levels have been introduced, depending on a claimant's age and household circumstances. The DWP guidance lists the weekly amounts as £61.41 for single claimants and lone parents under 25, £77.73 for single claimants and lone parents aged 25 or older, and £97.33 for couples where both members are under 18. For couples where at least one person is 18 or older but both are under 25, the disregard is £61.53. Couples where at least one member is aged 25 or older receive a disregard of £119.70. The amounts will be reviewed annually and adjusted in line with changes to Universal Credit and its earnings rules. The new disregards apply to earnings from both employed and self-employed work, provided the claimant meets the relevant eligibility requirements. There is also no minimum number of working hours required for the new disregard to apply. Government says reform will make work more worthwhile The UK Government said the previous arrangement created a disincentive for some residents to take jobs or increase their working hours because of concerns about losing housing support. The Department for Work and Pensions described the previous arrangement as a “cliff edge” and said the new system was intended to ensure that increasing earnings does not leave affected residents worse off. Minister for Social Security and Disability Sir Stephen Timms said the reform would allow residents to retain more of their earnings when they enter employment or increase their hours. The government has linked the measure to its broader welfare reforms aimed at increasing employment and reducing barriers that prevent people from moving into work. The changes are also part of a wider government programme that includes employment support for sick and disabled people. The government says it is investing £3.5bn in employment support, including its Connect to Work programme, which is intended to provide personalised assistance to people moving into employment. Young people among key beneficiaries Young people living in supported accommodation are among those expected to benefit significantly from the changes. The government said nearly 50,000 young people starting employment could benefit from the reform. Charities working with homeless and vulnerable young people have welcomed the changes, saying the previous system could make residents reluctant to increase their hours because they feared losing support with their accommodation costs. Centrepoint chief executive Seyi Obakin said the previous system had left some young people feeling unable to increase their working hours, change jobs or build savings without becoming financially worse off. St Mungo's, which also works with people experiencing homelessness, said removing the financial barrier could help more residents enter employment and build greater financial independence. Reform does not mean housing support is unaffected by earnings The new rules should not be interpreted as meaning eligible residents can increase their earnings indefinitely without any reduction in benefits. The DWP guidance makes clear that the new disregards are intended to reduce the specific cliff-edge effect created by the interaction between Universal Credit and Housing Benefit. Housing Benefit can still change as a claimant's circumstances and income change. The government has also stated that the new system does not remove all reductions in benefits as earnings increase. Instead, it provides additional income disregards to smooth the transition and prevent the unusually sharp loss of support that some claimants previously experienced. For people receiving Universal Credit rather than Housing Benefit for their accommodation costs, the rules are different. Universal Credit already allows claimants to work any number of hours, although their payment can decrease as earnings rise. Rules now in force The Housing Benefit (Earned Income Disregards) Regulations 2026 were laid before Parliament in July and came into force on October 5. The DWP subsequently issued further guidance to local authorities explaining how the new earnings disregards should be applied to eligible claims. The department said the new rules apply automatically to new and existing Housing Benefit claims where the claimant meets the eligibility requirements. Local authorities are responsible for implementing the changes in their Housing Benefit systems and assessing individual claims according to the new rules. The reform represents a significant change for people living in supported and temporary accommodation who want to increase their employment income. For eligible residents, the policy is intended to remove the previous situation in which taking on additional work could result in a disproportionately large reduction in housing support. The government hopes the change will encourage more residents to enter employment, increase their working hours and build greater financial independence while continuing to provide housing support for those who remain eligible.