More than 300,000 people living in supported housing and temporary accommodation will be able to keep more of their earnings when they take on extra work or increase their hours,
following new regulations laid before Parliament today (Monday 6 July).
The reforms will remove a longstanding financial barrier that left many residents worse off if they earned above certain thresholds, creating a disincentive to work and limiting opportunities to increase their income.
From October 2026, Housing Benefit earnings rules for people in supported housing and temporary accommodation will be aligned with Universal Credit, ensuring work is rewarded more consistently and reducing the risk of losing housing support when earnings increase.
The changes are expected to benefit around 315,000 claimants by removing the "cliff edge" that previously meant some people faced a sharp reduction in support after increasing their working hours. The reforms also address concerns that the previous system could discourage employment for both residents and housing providers.
The measures form part of the Government's wider programme of welfare reform, designed to strengthen incentives to work while maintaining support for those who need it most.
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”.
The regulations fulfil a commitment made in the Autumn Budget and are part of a broader package of employment and welfare reforms.
Recent measures include changes to Universal Credit to strengthen work incentives, the introduction of Right to Try legislation allowing disabled people and those with health conditions to test employment without immediate reassessment, and expanded employment support through the Connect to Work programme.
The Government is also deploying 1,000 Pathways to Work advisers to provide personalised support for people looking to move into employment, with Connect to Work expected to help around 300,000 people access jobs through tailored local services.
The new Housing Benefit rules will take effect in October 2026. Photo by Steph Gray from London, United Kingdom, Wikimedia commons.
