Issued by: Department for Work and Pensions

More than 325,000 residents in supported housing and temporary accommodation will keep more of what they earn when they take up work or increase their hours.

• New rules coming into force today will end the “cliff edge” loss of income faced by residents in supported housing and temporary accommodation when they increase their working hours.

• Comes as part of the Government’s wider plan to move from a welfare state to a working state, including a £3.5 billion investment in employment support and the biggest youth employment reforms in a generation to create almost one million opportunities for young people.

More than 325,000 residents in supported housing and temporary accommodation will no longer face a drop in income when increasing their working hours, under new rules coming into force today [Monday 5 October 2026].

Under the system inherited by this Government, people living in supported housing and temporary accommodation often received help with their day-to-day living costs through Universal Credit, while support for their rent was paid separately through Housing Benefit.

The two systems had different rules about how much someone could earn before their benefits started to be reduced and for people receiving Housing Benefit, those rules were less generous than for people whose support was provided entirely through Universal Credit.

As a result, some residents who moved into work or increased their hours could see their Housing Benefit reduced more quickly, leaving them worse off despite earning more. In some cases, the fear of losing support with housing costs acted as a disincentive to take on work. This created a cliff edge that trapped people on benefits rather than supporting them into work and financial independence.

The reforms will help make sure that people living in supported housing and temporary accommodation, including nearly 50,000 young people who are starting out in employment, are better rewarded for taking up work or increasing their hours.

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 aligns with Universal Credit, strengthening work incentives for more than 325,000 residents in supported housing and temporary accommodation.

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.

"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."

Sir Stephen Timms, Minister for Social Security and Disability, said:

"For too long, the system has been doing the opposite of what it should: it discouraged some of the most vulnerable residents from working rather than helping them into jobs.

"We’re putting that right, so that residents keep more of their earnings, and so that working more hours leaves people better off than staying on benefits.

"This is a promise from our Autumn Budget now being put into action, and it’s part of a much bigger effort to overhaul a welfare system that has trapped too many people in dependency for too long. We’re building a system that rewards work and lets people hold on to more of what they earn, while continuing to protect those who need it most."

Homelessness Minister, Florence Eshalomi, said:

"We’re investing over £4 billion to end homelessness for good, and employment is an important step in many people’s recovery. This is a crucial intervention that supports this mission – helping people into secure work or increase their earnings from work, in turn building lasting independence.

"We’ll continue to support people in temporary accommodation by ensuring that safe, stable placements are available to all who need them, tackling the unlawful use of B&Bs for families and improving access to vital support services."

Today’s rules come alongside previous steps to help people on disability benefits who want to work into work. We have rebalanced Universal Credit to tackle the perverse incentives that discourage work, while giving sick and disabled people support, they were denied under the previous government and introduced the Right to Try so people can try work without fear of immediate reassessment.

Seyi Obakin, Chief Executive Officer at Centrepoint said:

"This is a landmark win for young people, and we commend the government for getting this change over the line. For too long young people in supported housing, particularly those at the start of their careers, have had their ambitions blocked by a system that punished them for working harder.

"Young people told us that they often felt “trapped,” unable to increase their hours, change jobs or even build savings without feeling immediately worse off, as the cost of living, rents and utility bills continued to rise. From 5th October a young person living in supported housing will keep far more of what they earn, so their extra hours will finally add up. The changes will mean most young people will not experience the stark financial cliff edge they once faced.

"Young people will be free to take on more work, chase their career goals and build the futures they want. This is what it looks like when the system works for young people, and we are hugely grateful to everyone who made it happen."

Emma Haddad, CEO at St Mungo’s CEO said:

"St Mungo’s has long campaigned for this change, so we absolutely welcome this landmark moment in removing barriers to work for people living in supported accommodation.

"For many people, work is a way to build up financial resilience and independence and supports with maintaining and sustaining a home. But for people living in supported housing, work has often felt out of reach. It is reasonable for benefits to reduce as earnings rise; however, the system that is being replaced withdrew support so sharply that people were left worse off by working more. We have seen heart-breaking cases where people had to choose between earning and keeping their accommodation because of this perverse anomaly in the benefits system.

"Hundreds of people who St Mungo’s supports benefit from our learning, training and employment services so that they can improve their skills and confidence before entering the world of work. This change will allow more people to use their skills, which we know has positive impacts on their health and wellbeing and increases connection with communities, all of which are vital steps in the recovery from homelessness."

These measures come alongside an investment of £3.5 billion in employment support for sick or disabled people to end the culture of people being signed off and written off, including personalised support to help 300,000 people into work via the Connect to Work programme.

Additional information

• The Housing Benefit (Earned Income Disregards) Regulations 2026 were laid before parliament on 6th July 2026 and come into force on 5 October 2026.

• Five new earned income disregards are being introduced for working-age Housing Benefit claimants in supported housing and temporary accommodation.

• Disregard values will be updated annually. No group is made worse off by this change; any variation in the immediate financial gain reflects how existing Universal Credit and Housing Benefit tapers already operate.

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