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More than 300,000 people living in supported housing and temporary accommodation will no longer face a drop in income when they start work or increase their hours, under new regulations laid before Parliament on Monday 6 July 2026. The Housing Benefit (Earned Income Disregards) Regulations 2026 come into force on 5 October 2026 and deliver a change first committed to at the Autumn Budget.
The change addresses a specific structural problem in how Housing Benefit has worked compared to Universal Credit. For years, residents in supported housing who moved into employment faced a lower earnings threshold before their Housing Benefit started to be reduced than they would have experienced under Universal Credit. That gap created a disincentive to work and in some cases, according to the Department for Work and Pensions, led landlords to actively discourage residents from taking jobs to protect their own rental income.
Key Facts at a Glance
- Who is affected: Working age Housing Benefit claimants in supported housing and temporary accommodation
- Estimated reach: Around 315,000 people
- Regulations laid: 6 July 2026
- In force from: 5 October 2026
- No group is made worse off by the change, according to the DWP
Under the previous rules, Housing Benefit applied a less generous work allowance to claimants in supported housing and temporary accommodation than Universal Credit did. A work allowance is the amount someone can earn before their benefit starts to be tapered down. The lower allowance in Housing Benefit meant that some residents faced a cliff edge, take on more hours, earn a little more, and lose enough housing support to end up no better off or even worse off than before.
Sir Stephen Timms, Minister for Social Security and Disability, described the inherited system as "actively pushing some of the most vulnerable residents away from work rather than towards it."
Before:
- Lower work allowance: Housing Benefit had a less generous threshold than Universal Credit before tapering began
- Work penalty: Increasing hours could reduce housing support enough to wipe out any earnings gain
- Landlord incentive: Some supported housing landlords discouraged residents from working to protect rental income
- Trapped in dependency: Vulnerable claimants faced a structural disincentive to progress towards employment
After:
- Five new disregards: Earned income disregards introduced for working age claimants in supported housing and temporary accommodation
- Same rules, same incentives: Housing Benefit now calculates earned income the same way as Universal Credit
- Annual updates: Disregard values will be reviewed and updated each year
- No losers: Any variation in immediate financial gain reflects existing Universal Credit and Housing Benefit tapers, no claimant group is made worse off
The regulations introduce five new earned income disregards for working age Housing Benefit claimants living in supported housing or temporary accommodation. These disregards bring the calculation in line with how Universal Credit treats earned income, so the financial incentive to work is consistent across both systems.
The DWP says disregard values will be updated annually. The department has confirmed that no group of claimants is made worse off by the change, any difference in immediate financial benefit reflects how the existing Universal Credit and Housing Benefit tapers already operate, rather than an introduced disadvantage.
The regulations apply to working age claimants receiving Housing Benefit who are living in either:
- Supported housing: Accommodation provided alongside care, support, or supervision typically run by charities, housing associations, or local authorities
- Temporary accommodation: Housing provided by a local authority to households who are homeless or at risk of homelessness
- Estimated beneficiaries: Around 315,000 people once the regulations come into force
- Not affected: Universal Credit claimants, who are already subject to the more generous earned income rules, this change applies specifically to those still on Housing Benefit
The scale of the problem these regulations address has been limited in scope but significant in effect for those caught by it. Supported housing residents and people in temporary accommodation are, by definition, among the most vulnerable in the system often dealing with complex needs alongside the practical barriers to employment. A policy that made working financially risky for that group was, as the DWP acknowledges, a design flaw rather than an intended feature.
The regulations do not require primary legislation. They were laid before Parliament on 6 July 2026 under the existing Housing Benefit framework and will apply automatically from 5 October 2026 without the need for further parliamentary approval.
Key Takeaways
- The Housing Benefit (Earned Income Disregards) Regulations 2026 were laid before Parliament on 6 July 2026 and come into force on 5 October 2026
- Around 315,000 working age claimants in supported housing and temporary accommodation stand to benefit
- Five new earned income disregards bring Housing Benefit into line with Universal Credit, removing a cliff edge that could leave residents financially worse off for working
- No claimant group is made worse off by the change, according to the DWP
- The measure delivers a commitment made at the Autumn Budget and forms part of the government's broader package of welfare to work reforms