New rules now in force make a major change to hundreds of thousands of people who claim Housing Benefit. The change is being implemented from October and aims to benefit around 315,000 vulnerable claimants living in supported housing and temporary accommodation.
New changes to the welfare system which encourage work and ensure it always pays are now in force, according to rules laid in Parliament earlier this summer. The previous rules left vulnerable people in supported housing having to choose between staying out of work, or risk losing their housing support, because the work allowance was higher for Universal Credit than it was for Housing Benefit, the government said.
Cliff edge removed for claimants
DWP officials said the less generous rules for Housing Benefit created a cliff edge that trapped people on benefits rather than supporting them into work. Some landlords even discouraged residents from taking jobs to protect their own rental income. The rules came into force on 5 October 2026 and apply automatically to both new and existing claims.
Prime Minister Andy Burnham said: "People should never have to choose between keeping a roof over their head or being able to work. But the system has been rigged against some of the very people trying their hardest to get on, particularly young people starting out, who are being left worse off for earning more."
How the change works
"We're putting that right through a common-sense change that will help people keep more of what they earn. This is what progressive welfare reform looks like: helping people into work and giving families the security and breathing space they need to get on. That's how we make Britain better off."
The regulations change how Housing Benefit is calculated so it works in the same way as Universal Credit. Many residents in supported housing, also called specified accommodation, and temporary accommodation receive help with day-to-day living costs through Universal Credit and/or help with rent through Housing Benefit - these groups are generally excluded from the UC housing costs element.
Higher earnings disregards introduced
The two benefits previously used different rules for how earnings reduced support. Housing Benefit's earnings disregards were smaller and less generous, so as someone earned more (or increased their hours), their Housing Benefit could reduce sharply. This often left them worse off overall despite higher wages.
New earned income disregards are being introduced in Housing Benefit specifically for working-age claimants in supported housing or temporary accommodation. These higher disregards mean more of a person's earnings are ignored when calculating Housing Benefit, so support reduces more gradually in a way that better matches Universal Credit's approach.
Approximate weekly disregard amounts (these will be uprated annually to stay aligned with Universal Credit changes):
- Single claimant / lone parent under 25: £61.41
- Single claimant / lone parent aged 25 or over: £77.73
- Couple where both are under 18: £97.33
- Couple where both are under 25 (at least one 18+): £61.53
- Couple where at least one is aged 25 or over: £119.70
Sir Stephen Timms, Minister for Social Security and Disability, said: "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."
"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."
