Supported housing residents to keep more of what they earn as new rules come into force
New rules ending the benefit ‘cliff edge’ for supported housing residents take effect, aligning Housing Benefit with Universal Credit to reward work and protect earnings.
From today, over 325,000 residents in supported housing and temporary accommodation will no longer face an immediate loss of income when they increase their working hours, as new regulations come into force. The changes aim to remove a long-standing barrier where Housing Benefit reductions outpaced earnings, leaving some residents worse off despite working more. The Government states this reform is part of a broader shift toward a ‘working state’, alongside a £3.5 billion investment in employment support and youth employment initiatives.
Under the previous system, residents received Universal Credit for living costs and separate Housing Benefit for rent, with different earnings disregard rules that disadvantaged those in supported housing. When residents took up work or increased hours, Housing Benefit reductions often outweighed earnings gains, creating a financial disincentive to employment. The reforms align Housing Benefit calculations with Universal Credit, ensuring that additional work always leaves residents better off financially.
The changes are expected to particularly benefit nearly 50,000 young people in supported housing, who have reported feeling trapped by the system’s perverse incentives. Young people previously faced sharp financial penalties for working extra hours, making career progression or savings accumulation difficult. From today, most young residents will no longer experience the stark ‘cliff edge’ in income they once faced when increasing their earnings.
Charities such as St Mungo’s have welcomed the reforms, highlighting cases where residents had to choose between working and keeping their accommodation due to benefit withdrawal. The changes are seen as a step toward financial resilience and independence for people recovering from homelessness. The Government notes this measure complements a £3.5 billion investment in employment support for sick or disabled people, including the Connect to Work programme.