The Department for Work and Pensions (DWP) has confirmed that new rules for Housing Benefit and Universal Credit come into force on Monday, ending the “cliff edge” loss of income faced by residents in supported housing and temporary accommodation.
The reforms are designed to ensure that people living in these settings are better rewarded for taking up work or increasing their hours. According to the DWP, the new rule will “change how Housing Benefit is calculated so it aligns with Universal Credit”.
The change will “strengthen” work incentives for more than 325,000 residents in supported housing and temporary accommodation, the department said.
DWP statement on the new rules
A DWP spokesperson told Birmingham Live: “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.”
The statement highlights the government’s broader approach to welfare reform, linking the Housing Benefit change to earlier measures aimed at disability benefits claimants.
Centrepoint chief executive welcomes the change
Seyi Obakin, Chief Executive Officer at Centrepoint, welcomed the move, describing it as “a landmark win for young people” and commended the government for “getting this change over the line”.
Obakin said: “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.”
He added: “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.”
Impact on residents and next steps
The rule change, which takes effect from 5 October 2026, is expected to remove the financial penalty previously associated with earning more while living in supported housing or temporary accommodation. Residents will now retain a greater proportion of their earnings, with the DWP estimating that more than 325,000 people will benefit from improved work incentives.
The reform aligns Housing Benefit calculations with Universal Credit, ensuring a more consistent approach across the benefits system. For young people in particular, the change is intended to remove barriers to career progression and increased earnings, allowing them to build savings and pursue long-term goals without the fear of immediate financial loss.
