I'm not sure i understand this.
The Reg "4" referred to here is the retained HB reg 13(4) for cases where a person occupies "exempt" accommodation under para 4(1) of schedule 3 to the Consequential provision regulations.
Reg 13(4) identifies the vulnerable folk that need to be occupying the "exempt" accomodation in order for the rent restriction not to apply.
As far as i understand this if a person is receiving UC and are yet to be determined as having limited capability for work then their rent will be restricted to the RO maximum notwithstanding that they occupy Exempt accommodation because reg 13(3) will apply to them.
Where someone has limited capability for work you can only restrict to the RO maximum if there is suitable alternative cheaper accommodation, in all other cases reg(3) will not apply to them.
It is only the cases that are not restricted where the subsidy loss occures.
I'm rehearsing this now because we are looking again at all of ours and its so long since I been through it with a fine tooth comb – please dont take what ive said above as gospel – just setting out my reading
