Does granting immigrants access to the welfare state increase support for far-right parties? This article makes two contributions to this debate. Theoretically, we highlight the importance of welfare programs that provide benefits in kind. Because they are prone to congestion, in-kind programs are vulnerable to localized demand shocks that can activate distributional conflict between natives and immigrants. Empirically, we identify the impact of distributional conflict on national electoral outcomes by leveraging an exogenous shock to welfare eligibility. Focusing on an EU directive that forced Austrian municipalities to open public housing to previously excluded immigrants, we show that the reform increased support for far-right parties with welfare chauvinist platforms. Electoral ward data suggest that this response was concentrated in districts with a high proportion of public housing beneficiaries or low-end rentals. Our findings provide novel evidence that distributional conflict can accelerate the rise of far-right parties in countries with substantial in-kind welfare programs.