Housing Benefit changes in October 2026 to let thousands keep more of their wages - Will you be better off?

Hundreds of thousands of people living in supported housing and temporary accommodation could soon be better off when they take a job or increase their working hours, under new government plans set to take effect from 5 October 2026.

Under the plans, the way Housing Benefit is calculated will change for working-age people in supported housing and temporary accommodation, to help workers keep more of their earnings.

We explain what you need to know.

What the Housing Benefits changes mean for you

If you live in supported housing or temporary accommodation and receive Housing Benefit, you'll be able to earn more from work before your Housing Benefit starts to reduce.

It means you'll be better off if you start work or increase your hours as the benefit will reduce more gradually when your earnings rise.

Nobody needs to apply, the new rules will be applied automatically by your local council.

The changes are due to start on 5 October 2026 and will bring Housing Benefit more in line with how Universal Credit is paid.

What is Housing Benefit?

Housing Benefit helps people on a low income pay some or all of their rent.

Most people can no longer make a new claim because it has largely been replaced by Universal Credit.

However, it is still paid in some situations, including to:

• People who have reached State Pension age (if they qualify).

• People living in supported housing.

• People living in temporary accommodation arranged by a local council.

• Some people who have remained on legacy benefits and have not yet moved to Universal Credit (though these cases are becoming less common).

Housing Benefit is usually paid by your local council, rather than the Department for Work and Pensions (DWP).

What is supported housing?

Supported housing provides accommodation for people who need additional help to live independently. This can include people with disabilities, those experiencing homelessness, domestic abuse survivors, care leavers and people with mental health conditions.

Unlike most renters who receive support through Universal Credit, many supported housing residents receive Housing Benefit to help cover their accommodation costs because supported housing often comes with higher service charges and additional support.

How is Housing Benefit calculated?

The amount you receive depends on several factors, including:

• Your income

• Your savings

• Whether you're single or part of a couple

• The number of children or other people living with you

• Your rent

• Where you live

• Whether you're working

• Whether anyone else living with you is expected to contribute towards the rent (known as a non-dependant deduction)

The council then uses this information to work out how much help you need with your rent.

How much extra money could people keep?

The government has not yet detailed exactly how much better off households will be under the new rules.

However, ministers say the introduction of five new earned income disregards means more of a person's wages will be ignored when Housing Benefit is calculated.

This means claimants should be able to earn more before their Housing Benefit starts to reduce, helping them keep a larger share of any extra income they make from work.

The exact financial benefit will depend on factors including:

• Earnings

• Hours worked

• Household circumstances

• Housing costs

• Other benefits received

Why was the current system causing problems?

The government says the current rules mean some people living in supported housing can lose Housing Benefit more quickly when they start earning money than someone claiming Universal Credit alone.

It creates a situation where taking a job, accepting a promotion or working more hours doesn't always leave someone significantly better off financially.

This is often referred to as a benefits cliff edge because an increase in earnings can trigger a sudden reduction in support.

The government says some supported housing providers were also concerned about rental income, creating situations where residents felt discouraged from taking on more work.

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."