Young people living in supported housing will keep more of what they earn under new changes to Housing Benefit rules, after years in which working more hours often left them financially worse off.
For years, a flaw in the benefits system meant that those who tried to work more hours, take on extra shifts or do better paid work were often left financially worse off, as their Housing Benefit fell sharply when their earnings rose.
Now, residents aged 16 to 25 will keep more of what they earn. Around 30,000 young people living in supported housing receive Housing Benefit.
Youth homelessness charity Centrepoint welcomed the change by hosting a visit from Department for Work and Pensions Minister Stephen Timms MP to one of its East London supported accommodation services. There, the Minister met Sadaf, a 19-year-old resident who talked about her hopes for the future.
Throughout her time with Centrepoint, Sadaf has overcome difficulties but remains committed to her long-term aspiration to study medicine and build a better future for herself.
Like many young people moving towards independence, Sadaf viewed employment as a positive step towards self-sufficiency. Her intention in seeking work was not only to gain financial independence but also to fund her education and create future opportunities.
Sadaf said: “Working made me feel like I was moving forward. I finally felt like I was doing something productive and taking responsibility for my future.”
However, gaining employment triggered a significant reduction in Sadaf’s Housing Benefit entitlement. The reduction created a substantial gap between her accommodation costs and available income, resulting in rent arrears that eventually approached £5,000.
Rather than creating greater financial stability, employment created financial uncertainty. Housing uncertainty affected her future plans, educational opportunities, relationships and overall wellbeing.
Now that the system is working better, Sadaf is actively seeking employment again. She said: “There were times when it felt like working made everything harder, but I still believe education and employment are the way forward for me. I want to build a future where I can support myself, help other people and become the person I’ve always wanted to be.”
Seyi Obakin OBE, chief executive at Centrepoint, said: “This is a landmark win for young people, and we commend the government for getting this change over the line. 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.”
He added: “This is what it looks like when the system works for young people, and we hope it creates a smoother transition from benefits into work for them.”
The change matters because the move from supported housing into independent living is often the point at which young people are most at risk of falling back into homelessness. A system that rewards extra hours rather than penalising them removes one of the biggest barriers to that transition.
Housing pressures across the capital remain severe. Rough sleeping in London jumped 18% in a single quarter in new figures, while offices at Canary Wharf are being converted into 180 homes for families in temporary housing.
