LITERATURE REVIEW in choice based lettings

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LITERATURE REVIEW in choice based lettings

CHAPTER 2: LITERATURE REVIEW in choice based lettings2.0       INTRODUCTION

In order to establish a link between this study and other related works, this chapter is devoted to a review of current literature that has relevance to the subject of this study. This study begins with the definition of “choice bases lettings” and various perspectives of other interested parties in the subject of choice based letting in the UK.

This chapter will consider the literature based on the key themes:

Introduction to choice based lettings

Definition of choice based lettings

Needs versus choice

Empowering customers

Choice for vulnerable household.

2.1. Choice based lettings history

Within the last the years, there has been an increase in the number of British landlords who have adopted the Choice base lettings (CBL) systems, due to the concern about unfair, bureaucratic allocation of social housing . The research published in January 2001 by the then Department for Environment, Transport and the Regions (DETR) found that nine out of ten authorities used a points based system for allocating “mainstream vacancies” with provision for “high priority categories,” such as decants and victims of racial harassment, to be accorded “overwhelming priority.” The research found that wholly “date order” systems, under which applicants are made offers according to the size/type of dwelling they need and when they put their names on the register, had, at that point, entirely disappeared.

The length of time that someone applying for housing might have to wait before receiving an offer of accommodation will depend on several factors, including: the pressure of demand for accommodation within the area; the size and type of dwelling that they desire/require; and the degree to which they are willing to be flexible over their ‘areas of choice’. Prior to the 2002 Act a common feature of social housing allocation policies was that applicants were given relatively little, if any, choice over the property offered to them. In some cases, particularly homeless households, applicants were penalised for refusing offers of accommodation deemed suitable for their needs by receiving no further offers, or by being suspended from the housing register. This practice was blamed for producing a high number of “failed” offers resulting in a loss of rental income and staff time. The DETR research found evidence over the previous decade of allocations systems becoming “more coercive”, i.e. imposing penalties against applicants who refused offers. (DETR, 2001)

Choice Based Lettings Scheme was designed to replace a points-based allocation system with a lettings service that home seekers could understand, and to provide more choice and involvement in selecting a new home. Moreover, this was mainly inspired by the Dutch ‘Delft model’(Kullberg, 1997, 2002; Westra, 2001). The Dutch delft model was first developed in the Netherlands in the late 1980s and adopted by most Dutch social landlords. Choice based lettings approach is different from the traditional allocations systems that is operated in Britain, that is choice based lettings (CBL) operate open advertising of vacancies and a major transfer of power and responsibility to the customer rather the way it was operated in the traditional allocation system.(Kulberg, 2002)

Current government guidelines in England suggested that choice based lettings should offer tenants the opportunity of deciding where they wish to live and when they want to move. The Government’s Housing Green Paper and other policy initiatives are encouraging social landlords to offer more ‘choice’ in lettings. The first district-wide scheme was launched in early 2000 in Harborough (a rural local authority area in the East Midlands). By 2003, nearly 80 local authorities in England claimed to be using a CBL approach (Brown, Lishman and Richardson, 2005). The Schemes are operating in a range of housing market situations including high and low demand as well as in urban and rural locations. The Office of the Deputy Prime Minister (ODPM) set targets in April 2002 that 25% of local authorities should operate such a system by the end of 2005 and 100% by 2010. In January 2005, the Government reaffirmed these targets as well as giving a commitment to operate a nationwide scheme by 2010 (ODPM, 2005). It also pledged to explore extending the scheme to the private rented sector and to low cost home ownership.

The Government’s policy aims were originally set out in its consultative Green Paper (DETR & DSS, 2000 p 12). This emphasised four objectives – offering choice, tackling social exclusion, helping to create sustainable communities, and encouraging the effective use and management of social housing. Each scheme has set its own priorities based on the views of local stakeholders and the nature of the local housing market. Allocations and lettings is one of the key tasks for social housing organisations. In 2002/03, local authorities and housing associations in England let 432,000 properties. ‘How these are let and to whom they are let to, therefore, have been of fundamental concern.

The Housing Act, 1996, (as amended by the Homelessness Act, 2002) together with additional advice in the form of, for example, a Code of Guidance suggested that, each local authority should publish an allocation scheme that must give reasonable preference to certain groups in housing need e.g. households with a particular need for accommodation on medical or welfare grounds. It also asserted that local authorities and housing associations must balance need and customer choice. These focus on need and can be traced back to the Cullingworth Report which suggested that, need and fairness should be central to allocations policies (Central Housing Advisory Committee, 1969). It contributed to a shift towards points-based systems that became dominant by the 1990s. (DCLG, 2007).

Brown, et al (2000) found that over 85% used a points-based system. The research also point out that, two-thirds of respondents in early 2000 did not intend to offer greater choice in the future. This was partly because organisations cited a range of examples of incremental policy changes that already contributed to relatively greater customer choice particularly preference for geographical areas, non-penalisation for declining reasonable offers and fast-tracking process for letting low demand properties. But, nearly 60% of respondents were undertaking or intended to start within twelve months and to do a fundamental review of their allocations policies and procedures. The reasons for reconsidering lettings systems centred primarily on changing patterns of housing need (44%), creating sustainable communities (27%) and improving organisational performance e.g. reducing voids and related periods (14%). (Brown, et al 2000).

By mid 2003, over 20% local authorities self-assessed themselves as operating the scheme. This covered just over 30% of the local authority stock in England i.e. approximately 750,000 dwellings, and approximately 10% of the housing association stock i.e. 150,000 – 200,000 properties. The Government wishes, firstly, to see each local authority area having a comprehensive and integrated scheme, and secondly the adoption of a sub-regional and regional approaches with a view to moving towards a national scheme by the end of the decade (Brown, et al, 2005).

According to statistics 80 per cent of local authorities in England participated in Choice-Based Lettings (CBL) on 1 April 2010, an increase from 61 per cent on 1 April 2009 Local authority landlords in England made 155,800 lettings during 2009/10, increasing from 151,700 during 2008/09. This follows a general decline from 354,000 in 1999/00 ( statistic 2010)

2. 2. What is Choice-Based Lettings?

CBL schemes were introduced in England through the Homelessness Act 2002. CBL replaces the traditional way of allocating housing where housing officers seek to match applicants with priority on the waiting list to available vacancies. Instead, CBL allows applicants for social housing (and existing tenants seeking a move) to apply for available vacancies which are advertised widely. Applicants can see the full range of available properties and can bid for any home to which they are matched. The successful bidder is the one with the highest priority under the scheme. The Government Green Paper commented that local authorities had considerable scope under existing legislation to adopt ‘customer choice-based lettings systems’ (DETR and DSS, 2000). The Homelessness Act, 2002, and the associated code of guidance emphasised a more general principle which states that“allocation policies for social housing should provide choice wherever possible while continuing to meet housing need this is the best way to ensure sustainable tenancies and build settled and stable communities.” (ODPM, 2002a, paragraph 5.3.)

More so, the ODPM published some advice to clarify its position on the target that was set out in 2002, that schemes should meet each of the seven principles as part of an incorporated CLB system that covers all of the social stock in an area and any initiative that does not offer broader customers advice on housing options are not right. These principles are as follows-

Initiatives taken by the customers: this is an initiative taken by the customers Whereby, an opportunity to apply for a property rather than being offered a property by the housing officer.

Social market information: customers must be provided with detailed information about what properties are available and who can apply, that popularity of particular type and location of property, and indicates their chances of making a successful application.

Property & neighbourhood features: the information provided must gives more detail about property features such as central heating, energy efficiency, schools, garden etc., and offer ‘real choice’ as in the private, owner-occupied sector.

System for vulnerable households & priority: support for vulnerable group is set into priority card or a banding system based on ‘levels of need’ are used to protect vulnerable people and ensure that people in most urgent need can be supported. This should also lead to improved housing opportunities for vulnerable

Labelling & selection criteria: simple and clear eligibility conditions are applied for customers wishing to become a home seeker on the regular housing. Once on the list a simple and easy to understand system operates for establishing priority for being offered a property.

Communication: the quality of information between landlord ands and home seekers is central to system. The adoption of ‘good practices’ in the use of advertising channels include the use of regular mail-outs, telephone and personal response to customer, use of information technology and web sites and the establishment of property shops (similar to estate agents)

Advice on housing options: customers are given vital advice on housing options that

available to them. (ODPM, 2002)

Brown, et al (2005) asserted that, the traditional schemes can be altered so that applicants who refuse offers are not penalised that is, the abandonment of ‘limited offer policies’. This shows that it is necessary to avoid the false dichotomy between CBL and traditional allocation system of suggesting that the former provides choice and the latter provides no choice. Similarly it is important to dismiss a further related myth that CBL does not take account of need while traditional allocation systems it focus on need. ( Brown, et al 2000)

As Cowan and Marsh (2004) in their review of two legal cases pointed out that, the Court of Appeal has generated a number of questions about the implementation of CBL within the existing legal framework. Basically, the primary legislation remains focussed on local authorities taking account of relative need, while the CBL advice centres on pushing forward a customer choice agenda. As the Government has frequently pointed out in its guidance, it is up to individual local authorities to satisfy themselves that they are m The legal framework, nevertheless, remains unclear. The Government has published guidance but its status is advisory. The primary legislation such as the Housing Act, 1996, as amended by the Homelessness Act, 2002 emphasises the broader principle of choice and that this must be balanced with taking account of need. and the government set out that:

•People should have as much opportunity as possible for their views to be

taken into account when they are seeking a new home.

•Choice should be available both to new applicants and to existing tenants wishing to move. To limit void periods, people should be able to choose properties before they have become empty wherever possible.

•Choice should be free. There should be no penalty for those who do not want a property on offer (although the time allowed for choice may need to be limited in certain situations).

•Choice should be as wide as possible. Local authorities and registered social landlords should consider the scope for pooling their property and making it available to people from outside their own local area. Vacancies in areas of lower demand should be available to people in areas of higher demand, although priority might continue to be given to people who have a strong local connection with an area or a pressing need to move there. The flexibility to allow greater priority to local people would enable authorities in areas of high demand (including small village communities with a limited supply of affordable housing) to avoid any additional pressure being placed on their stock.

•Simple and accessible systems. People should be able to apply for lettings and transfers easily and know to whom they should turn for help.

•Choice should be well informed. People should understand what housing is available and what their chances are of getting it. Housing authorities (in conjunction with social services authorities where necessary) should give additional advice and assistance to those who might otherwise have difficulty finding or applying for housing suited to their needs.

•Choice for homeless people. A choice of settled accommodation is as important for homeless people as it is for those in urgent need on the waiting list, although choice may have to be more limited for homeless people in certain circumstances.

•Systems should be sensitive to local needs. Under Best Value, and Tenant Participation Compacts, local people and existing tenants should be consulted about local policies. Local lettings policies that restrict individual choice need to be well justified.12 eeting statutory requirements. Although this enables schemes to be developed to reflect local circumstances and avoids an over-prescriptive focus by the Government, it does not sit easily with the targets set by the ODPM or the advisory requirement that local authorities should adopt CBL. (Cowan and Marsh 2006)

Although, Marsh et al (2007), stressed that landlords are still in charge of how the process

take place that is, they still influence the whole outcome of the system in that, they set the

rules that must be followed Partly in an attempt to recover legitimacy among consumers.

Choice Based Lettings (CBL) systems usually allocate with the persuasion that there is ‘limited offers’ of properties. They always say that they are not building more properties and that they are going to make use of the stock at hand. These rules are usually incorporated within traditional allocations systems too. (Marshal et al, 2007)

In May 2006 the Audit Commission published Analysis of Choice in Local Public Services, a survey of authorities which was carried out in 2005 by the Commission found out that those authorities not offering CBL schemes tended to cite a shortage of stock and concerns about set-up and running costs. The Audit Commission analysed the potential costs and benefits of these schemes and concluded that Choice-based lettings bring a range of benefits that would not accrue under a traditional lettings system. There is better matching of supply to preferences, including a greater likelihood of letting previously hard-to-let properties. The greater transparency of the system means that it is seen as fairer. (Audit Commission 2006)

2.3 Need versus Choice

Choice-based lettings (CBL) schemes are designed to introduce an element of choice for applicant in need of council and housing association homes. Choice-based lettings allow people to applying for homes (including existing tenants who want a transfer) to bid for properties which become available on a points-based system.

The government stressed that, local authorities must consider whether they should frame their allocation scheme to give additional preference to those “ who fall within the reasonable preference categories and who have urgent needs” The examples given include those who have to move because they have an urgent medical reason or who are experiencing threats of violence ( ODPM, 2000). Brown et al (2003) also articulated that, “there is no national consensus on what constitutes ‘need’ and allocations policies reflects a combination of factors reflecting the state of the local housing market and local political considerations. This will partly be to do with the definition applied to qualitative concepts and that what constitutes “need” may vary between LA Authorities. (Brown, 2003)

Moreover, in enabling applicants to make an informed choice about their accommodation is at the heart of choice based lettings. This would include allowing applicants to make reasonable compromises: eg a disabled applicant bidding for a first floor flat provided there is a lift, or a family bidding for a property which does not have sufficient bedrooms where the landlord is prepared to extend the loft. However, it is important that authorities do not frame their allocation scheme so that self-assessment by applicants becomes a substitute for a proper assessment of comparative housing need. Rather allocation schemes must be framed so that authorities are able to put applicant in need, are given the appropriate priority for housing which meets their needs. (DCLG, 2008)

According to the Research carried out for Communities and Local Government longer impact of choice based lettings, they found out that tenants who were offered a choice of accommodation were more likely to be satisfied with their home and remain in that home for a longer period and are more likely to meet their tenancy obligations and maintain the property in good condition. (Pawson, et al 2006)

The government believes that allocation policies for social housing should allow applicants to be given more of a say and a greater choice over the accommodation which they are allocated, while continuing to ensure that the primary purpose of social housing is to meet housing need. This is the best way to ensure sustainable tenancies and to build settled viable and inclusive communities. (ODPM, 2005)

The Housing Green Paper (DETR, 2000a) supported ‘broad brush’ banding systems in place of often highly complex points systems, but the legal limits of such flexibility have subsequently been somewhat clarified by case law. Reinforcing the earlier Reilly and Mannix decision, “the Court of Appeal ruled in the Lambeth LBC v Lindsay [2002] EWCA Civ 1084B case that local authorities must take account of the number of ‘reasonable preference’ grounds that apply in any case”. ( Court of Appeal, 2002) Thus, any allocations scheme must have a clear mechanism for assessing cumulative need under two or more of these categories. This ruling can be interpreted as outlawing schemes that allow housing applicants to ‘trade off ’ availability against property size or type, where this results in their choosing a dwelling deemed ‘unsuitable or too small for their needs. (DETR, 2000a)

Forman, (2002); Cowan and Marsh, (2004) believes that, the Lindsay judgment is calling into question the legality of some CBL schemes that attempted ‘excessive simplification’ of applicant ranking policies previously dominated by bureaucratically defined ‘need’. In their research they also found that a number of the ODPM CBL pilot schemes had been reshaped to take account of the Lambeth case, but argued that uncertainty remained as to whether these modifications were, in all cases, sufficient to address the judgment’s implications. (Forman, 2002; Cowan and Marsh, 2004)

l2.4 Empowering the customer

Empowering consumers to choose their new homes is central in any choice-based lettings system. Yet in some areas like Harborough where there are shortages of social housing stock, that means choice will be highly constrained. This was the reality faced by the boroughs that operate Choice Based Lettings scheme. The scheme was established to enable a shift

for home seekers and social landlords, from point-hunting to home-hunting, dependency to empowerment, artificial boundaries to real housing markets, organisational to a customer focus.

Brown et al, (2000) argued that the empowerment of home-seekers inherent in the CBL approach represents a decisive break with the paternalist tradition in the area of housing practice (Brown et al, 2000). At the same time, it must be acknowledged that most CBL schemes retain some bureaucratic elements such as, when determining eligibility and priority of applicants on the basis of assessed need (Pawson, 2002; Mullins and Rowlands, 2004).

However, one of the aims and requirements of choice-based lettings is to readdress this imbalance through the principles of ‘market information’ and ‘property and neighbourhood details’. The CBLs pilots are using a wide range of approaches to improve the availability of information. Measures include using free newspapers that are distributed to all households in an area, mail outs to all households on the housing register, and the use of interactive websites. But, as important as the information medium, is the nature of the information. According to the HHS research which reveal that customers are not only requiring detailed information about advertised properties but they also want to find out about the quality of the nearby schools, the location of the nearest health centre and the availability of public transport. This has proved challenging to many of the pilots schemes as housing organisations have tend not to have ready access to this material. Although, the three surveys that was carried out in November 2000, found out that, satisfaction levels have been high and consistent. For example, over 80% of respondents in each of the surveys felt that sufficient information was provided on how the system operates, adequate information was provided on advertised properties and that it was straightforward to join HHS. Indeed, as it has already been pointed out, over 80% of respondents who could compare the previous and HHS systems in 2000 preferred the former allocation system to choice based letting system. (March 2002 and 2003)

2.5 Choice and vulnerable Adult

The need to provide support for vulnerable groups has been a key principle of CBL and the bidding guidance which was issued by the then DETR, which states that Local authorities should set out how they would provide support needs of people from vulnerable groups

and how they would make special arrangements to ensure that vulnerable, difficult or

excluded applicants would be assisted to negotiate the process.( DCLG 2000) However, a key issue that this raised, is the extent to which the participation of someone from a vulnerable group is the landlord’s responsibility and the extent to which it is reasonable for the applicant to do so.

The Social Exclusion Unit’s April 2000 consultative report, National Strategy for Neighbourhood Renewal, concluded that the way local authorities allocated social housing reinforced, and even caused, problems by concentrating the most vulnerable people in one place. It identified “imaginative use of lettings policies” as a way in which authorities could create more “mixed communities where problems reduce and a wide range of people want to live”. And made recommendations calling for the then forthcoming Housing Green Paper to incorporate more open access and more tenure and income diversification into the social housing stock. (The Social Exclusion Unit’s April 2000)

According to the evaluation that was Carried out among Vulnerable groups the evaluation found that the lack of support for vulnerable groups was an area of concern. The extent to which the principle of customer empowerment and meaningful choice for vulnerable people weather it has been effectively delivered was open to question. This was specifically addressed in the later longer term impacts study which also found that it was standard practice to maintain lists of applicants in need of special assistance; and to send ‘assisted list’to applicants vacancy adverting list by direct mail. In some instances such applicants were periodically contacted to notify them of ‘potentially suitable’ vacancies and offer to make proxy bids on their behalf as well as facilitating the effective role of advocates through briefing and outreach work with voluntary agencies, caring professionals and others to raise awareness of scheme rules and processes. (Piloting Choice Based Lettings: An evaluation)

Kullberg (2002) suggested that, it is essential to focus on vulnerable households to evaluate whether, for example, socially excluded groups are empowered through the system, the extent to which information is made available in appropriate ways, and most importantly if vulnerable groups feel satisfied with the new lettings approach. It is particularly important to investigate this issue as some of the Dutch evaluation of choice-based lettings has pointed out that disadvantaged groups appear, at best, to fare no better than under traditional allocation systems. ( Kullberg 2002). Likewise, Bacon and Brown, (2001) and Holmes, (2002). Although this raises issues over whether it is valid to draw comparisons, especially as Dutch welfare and homelessness legislation is rather different from that in Britain (Barker, et al 1998), it nevertheless poses important challenges.

Bochel and Hawtin (2008) have argued that, there is a need to change from an agency to a user perspective (which is what CBL purports to do). One of the biggest impacts in this area is the implementation of the new supporting people regime, from April 2003. The core objective is to support independence and user involvement, which fits in with the objectives of choice-based lettings and the principle of empowerment. ( Bochel and Hawtin,2008)


However, we can say that the development of choice-based lettings can usefully be analysed as part of the decision-making process involving the balance between meeting ‘need’ and ‘choice’ in the allocations process. The evidence from a number of the early CBLs schemes is that households support this radical step change in that the system is felt to be transparent and fairer as well as most importantly enabling greater choice to be exercised. Nevertheless, as has been pointed out by a number of academicians and researchers, this initiative does not address wider structural problems in the social housing market. Choice based lettings (CBLs) is, therefore, a reform to the way in which social housing is allocated rather than a fundamental tool in rethinking the role of social housing. However, the focus of this literature has been on meeting needs and allowing people to make choice, vulnerable households and CBLs. In particular, the emphasis has been on whether and how this new system of lettings meets their ‘needs’, as there have been concerns that the nature of this type of approach might reinforce inequalities through the allocations system. Using evidence drawn from the early experiences of CBLs schemes.

The next chapter will deal with the research methods and methodology used in carrying out all the research work for this study.

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