More than 325,000 people living in supported housing and temporary accommodation across the United Kingdom can now increase their working hours without facing the previous sharp cut in housing support, under new rules that came into force on Monday.
The Department for Work and Pensions announced the changes, which are expected to particularly benefit nearly 50,000 young people starting out in employment. Charities had long warned that the old system forced many into difficult financial choices when they tried to take on more work.
Under the previous rules, some residents received Universal Credit for day-to-day living costs while their housing costs were covered separately through Housing Benefit. Because the two benefits applied different earnings rules, Housing Benefit could be reduced more quickly once someone started work or increased their hours. As a result, some people ended up financially worse off despite earning more.
The new rules align the treatment of earnings under Housing Benefit more closely with Universal Credit for working-age claimants in supported housing and temporary accommodation.
Seyi Obakin, Chief Executive of youth homelessness charity Centrepoint, called the reform a landmark for young people. He said many had told the charity they felt “trapped”, unable to increase their hours, change jobs or build savings without becoming worse off.
“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,” Obakin said.
Emma Haddad, Chief Executive of St Mungo’s, said the charity had seen people forced to choose between earning more and keeping their accommodation.
“For many people, work is a way to build up financial resilience and independence and supports with maintaining and sustaining a home,” she said.
Prime Minister Andy Burnham said people should not have to make that choice.
“People should never have to choose between keeping a roof over their head or being able to work,” he said.
Sir Stephen Timms, Minister for Social Security and Disability, said the previous system had discouraged some residents from working. The changes, he added, would ensure that increasing hours left people better off than remaining on benefits.
The government is introducing five new earned-income disregards for these claimants. The values will be updated annually, and officials said no group would be made worse off by the reforms. The regulations were laid before Parliament on 6 July 2026 and took effect on 5 October.
