The Department for Work and Pensions (DWP) has confirmed updated guidance affecting how property ownership is assessed for pensioners claiming means-tested benefits in 2026.

The changes do not affect the State Pension itself, but they do impact how housing assets are treated when assessing entitlement to support such as Pension Credit, Housing Benefit and Council Tax Reduction.

For most pensioners living in their main home, protections remain in place. However, those with additional properties, rental income or recent transfers of ownership may face closer scrutiny under the revised framework.

What Has Changed?

The updated DWP approach focuses on:

• Closer assessment of second properties
• Stronger checks on deprivation of assets
• Tighter rules around rental income reporting
• Continued use of Support for Mortgage Interest (SMI) as a loan

The reforms are part of a broader effort to ensure means-tested support is targeted at those with the lowest overall resources.

Which Benefits Are Affected?

The changes relate to means-tested support, not the contributory State Pension.

Benefits potentially affected include:

• Pension Credit
• Housing Benefit (legacy claimants)
• Council Tax Reduction
• Support for Mortgage Interest (SMI)
• Some income-assessed disability top-ups

If you receive only the new or basic State Pension, your weekly pension payment is unchanged.

Is Your Main Home Still Protected?

Yes — in most cases.

The DWP has confirmed that a pensioner’s main residence remains disregarded when calculating capital for:

• Pension Credit
• Housing Benefit
• Council Tax Reduction

This means pensioners will not be required to sell their primary home to qualify for support.

However, exceptions may apply if:

• You permanently move out
• You enter long-term residential care
• You rent out the entire property
• Legal ownership is transferred

Second Homes and Buy-to-Let Properties

Stricter scrutiny now applies to additional properties.

If you own:

• A holiday home
• A buy-to-let property
• A property held jointly but not lived in

The market value minus outstanding mortgage debt is normally treated as capital.

If your total capital exceeds eligibility thresholds (currently £10,000 for Pension Credit calculations, with tariff income applied thereafter), entitlement may reduce or stop.

Temporary disregards may apply if a property is actively being sold, but these are time-limited.

Renting Out Part of Your Home

If you rent out a room:

• The property can still be classed as your main home
• Rental income is generally counted as income
• Certain allowances may apply

Failure to declare rental income could lead to overpayments and recovery action.

Deprivation of Assets: Stronger Enforcement

One of the most significant updates concerns deprivation of assets.

If a pensioner:

• Transfers property to children
• Gifts equity
• Sells property significantly below market value

and the DWP believes this was done to increase benefit entitlement, the department can treat the person as still owning that asset.

There is no fixed time limit on how far back the DWP can review transfers. Each case is assessed on intent and timing.

Support for Mortgage Interest (SMI)

For pensioners with an outstanding mortgage, SMI remains available, but only as a loan.

Under current rules:

• Payments are secured against the property
• Interest accrues over time
• The loan must be repaid when the property is sold

This provides short-term support but reduces the value of the estate.

Impact on Pension Credit Claimants

Pension Credit claimants are being encouraged to:

• Review property holdings
• Declare any partial ownership interests
• Report changes in living arrangements
• Keep mortgage and valuation records

The DWP has reiterated that honest and accurate reporting is essential.

Importantly, many eligible pensioners still do not claim Pension Credit at all — meaning they may miss out on:

• Free TV licences (if aged 75+)
• Council Tax support
• Cold Weather Payments
• Help with NHS costs

Why the DWP Is Reviewing Property Rules

The government states that:

• Pensioner home ownership has increased significantly
• Property values have risen sharply in many regions
• Public finances require targeted allocation of means-tested support

The aim is to balance protection of main homes with fair assessment of additional wealth.

What Pensioners Should Do Now

If you are a homeowner receiving or planning to claim means-tested benefits:

• Confirm which properties you legally own
• Check if any recent transfers need reporting
• Keep documentation of valuations and mortgages
• Seek advice before gifting or transferring property

Free support is available via:

• Local council welfare teams
• Citizens Advice
• Pension advisory services

Will Pensioners Be Forced to Sell Their Homes?

No.

The DWP has confirmed that main residence protection remains in place.

The changes relate primarily to:

• Additional properties
• Rental arrangements
• Asset transfers

For most pensioners living solely in their primary home, the impact will be limited.

FAQs

Does this affect my State Pension?

No. The State Pension is not means-tested and remains unchanged.

Will I lose my home?

No. Your main home is still disregarded in most benefit calculations.

What if I own a second property?

The market value may count as capital and affect means-tested benefits.

Can the DWP review past property transfers?

Yes. There is no strict time limit if deprivation of assets is suspected.

Is Support for Mortgage Interest still available?

Yes, but it is a loan secured against your property.

Do I need to report renting out a room?

Yes. Rental income must be declared.