The Department for Work and Pensions (DWP) has confirmed a significant change to housing benefit rules that will take effect on October 6, 2026, affecting approximately 300,000 claimants. The new regulations aim to remove a 'cliff edge' that previously penalised claimants for increasing their working hours, effectively trapping them in unemployment or risking the loss of housing support.
Why the Change Was Needed
Under the existing system, the work allowance for Housing Benefit was less generous than for Universal Credit, creating a disincentive for claimants to seek employment or increase their hours. The DWP explained that this disparity left vulnerable people in supported accommodation forced to choose between remaining unemployed or losing their housing support. Some landlords even discouraged residents from taking jobs to protect their own rental income.
Sir Stephen Timms, Minister for Social Security and Disability, stated: 'The system we inherited was actively pushing some of the most vulnerable residents away from work rather than towards it. These changes fix that - ensuring residents can keep more of what they earn, so that taking a job or increasing hours always pays better than benefits.'
Details of the New Regulations
The change aligns Housing Benefit calculations with Universal Credit, meaning claimants can keep more of their earnings before their benefit is reduced. The DWP said: 'The less generous rules for Housing Benefit created a cliff edge that trapped people on benefits rather than supporting them into work. As part of the Government's commitment to move from a welfare state to a working state, the regulations change how Housing Benefit is calculated so it works in the same way as Universal Credit – a change that will incentivise work for 315,000 people when they come into force in October 2026.'
Five fresh earned income disregards are being introduced for working-age Housing Benefit recipients in supported housing and temporary accommodation, ensuring that work always pays.
Wider Welfare Reforms
The housing benefit change is part of a broader package of welfare reforms. The DWP has already rebalanced Universal Credit to tackle perverse incentives that discouraged work and introduced Right to Try legislation, allowing sick or disabled people to try work without the immediate fear of reassessment. Additionally, the Connect to Work programme will deliver tailored support to help 300,000 people into employment, and 1,000 Pathways to Work advisers have been deployed to assist those written off by the previous government.
Sir Stephen Timms added: 'This announcement delivers on a commitment made in our Autumn Budget, and forms part of the government's wider plan to reform the welfare system - tearing out the barriers that have trapped people in dependency. We are replacing that system with one that rewards work and ensures people keep more of what they earn, while protecting those who need it most.'
