For years, people living in hostels, refuges and other supported housing have faced a tough choice. Take a job or pick up extra shifts, and you could end up with less money than before, because your Housing Benefit dropped faster than your wages went up.
That changed on October 5. New DWP rules now let working-age Housing Benefit claimants in supported housing and temporary accommodation keep more of what they earn, in line with how Universal Credit already works. The government estimates around 325,000 people are covered.
What was the problem?
Most people on benefits now get help with rent through Universal Credit. But people in supported housing and many in temporary accommodation still get their rent paid through Housing Benefit, while the rest of their support comes from Universal Credit.
The two systems treated wages differently. Housing Benefit started cutting back sooner, and it still carried an old cut-off at 16 hours of work. So when someone took a job or worked more hours, they could lose Housing Benefit faster than their pay increased. Charities have called this a “cliff edge,” and it put many people off working.
What’s changed
From October 5, 2026, new regulations (the Housing Benefit (Earned Income Disregards) Regulations 2026) brought Housing Benefit into line with Universal Credit:
- Five new earnings disregards now apply. These are amounts of your wages that are ignored when your Housing Benefit is worked out.
- The disregards mirror Universal Credit, so the two benefits no longer pull against each other when you earn more.
- The amounts will be updated every year.
- Your entitlement is now based on your earnings and circumstances rather than the old 16-hour rule.
The government says nobody will be worse off under the new rules. How much better off you are will depend on your own situation.
Sir Stephen Timms, Minister for Social Security and Disability, said the change is “a promise from our autumn budget now being put into action.”
Who it helps
The change applies to working-age people who get Housing Benefit and live in:
- supported housing, such as homeless hostels, refuges, and schemes for people with mental health needs or recovering from addiction
- temporary accommodation, often arranged by the council for homeless households
DWP says this includes around 50,000 young people starting work. Charities say it matters most for them, because a first job is often exactly when the old rules caused the biggest drop.
Pensioners on Housing Benefit and people in ordinary rented homes aren’t affected by this change.
Do you need to do anything?
You don’t need to make a new claim. The new rules apply to how your Housing Benefit is calculated. But it’s still worth:
- telling your council about any change in your work or earnings straight away, as you always should
- checking your next Housing Benefit decision letter after a change in earnings to make sure the new disregards have been applied
- talking to your support worker or keyworker if you’ve turned down work or extra hours before because of the benefits impact. It may now be worth looking at again
DWP says it’s also preparing guidance and a benefits calculator for residents and frontline staff.
Homelessness charities campaigned for this for years. Rick Henderson, chief executive of Homeless Link, said the old rules were “a key challenge preventing the people they support from moving into work.”
Sources: Homeless Link, Big Issue and GOV.UK, Department for Work and Pensions.
Maria is a dedicated news writer covering the latest UK updates on DWP, PIP, State Pension Triple Lock, Child Benefit, Universal Credit, and driving licence regulations. She focuses on explaining government announcements, benefit eligibility, payment changes, pension increases, and new regulations in a clear and easy-to-understand way.