Blog: How do Housing First Caseworkers Lease-up Clients?

Housing First (HF) is a homeless service model that has spread across advanced industrialised countries. Unlike Treatment First models, which require homeless individuals to achieve benchmarks prior to getting rehoused, HF immediately puts them in permanent accommodation with wraparound support (Tsemberis, 2010). The implementation of HF is complicated because caseworkers lease-up clients in local rental markets.

Past research suggests that HF is an evidence-based way to end chronic homelessness that allows caseworkers to focus more on clinical rather than housing counselling services (Henwood, Stanhope, and Padgett, 2010). My new article in Housing, Theory and Society entitled ‘How do Housing First Caseworkers Mediate Landlord-Tenant Conflicts’ uses a case study with 44 in-depth interviews and five focus groups to qualify that claim.

This essay extends the recent study by answering the question: How do HF caseworkers lease-up clients? It offers supplementary data and analyses that were excluded from the original manuscript. I continue by first describing the theoretical framework that I used to do this analysis and then looking at the ways HF caseworkers form leases with private landlords for their clients.

What are Housing Counselling Services?

Little research has examined the housing counselling services that HF caseworkers deliver. The few studies that have been published on this topic have under-theorised it. My new article advances past research by conceptualising housing counselling services with transaction cost economics (TCE).

From that perspective, a transaction is a market exchange between supplier and buyer that can vary in frequency, certainty and investment (Williamson 1979). Repeated, uncertain, idiosyncratic transactions expose co-signers to ‘transaction costs’: informal (non-)financial investments, beyond the price of a commodity, that burden someone during a market exchange. Coase (1960) distinguishes three kinds of transaction costs: search, bargaining, and enforcement. Search costs are the investments to find earnest transaction partners. Bargaining costs are investments to negotiate contracts. Enforcement costs are the investments to ensure co-signers honour contractual obligations. A rental lease is a frequent, uncertain, and idiosyncratic transaction that exposes co-signers (i.e., landlords and tenants) to transaction costs.

My new paper analyses the way HF caseworkers manage enforcement costs throughout their clients’ leases. It provides evidence that caseworkers absorb enforcement costs by accepting managerial responsibility or delegating those obligations to another stakeholder. This blog post advances that research by examining the ways caseworkers absorb or delegate search and bargaining costs whilst forming or renewing a lease.

Search Costs

Participants said clients confronted high search costs because of landlord discrimination. They absorbed those costs by building landlord partnerships to quickly rehouse clients:

‘[Housing First] themselves will give you a list of people that have rented before…And saying, “If you don’t know where to start, you may want to try these landlords.” So, that can be helpful.’ [Andy]

The trust participants formed with these landlords allowed them to rehouse clients with complex needs:

‘I have one landlord where I can call her and be like, “Look, this guy is a mess. He is a fire hazard” … “Sure, we’ll try it”, because she knows that I’m going to be there and I’m going to be communicative and be present.’ [Alice]

This absorbed search costs for both the landlord by reducing the time they spent looking for a tenant and the client by minimising the time they spent looking for a pliable landlord. When clients refused properties in their caseworkers’ network or landlord partners rejected a client, then respondents absorbed search costs by combing the rental market for a unit:

‘I do the searching…If I find something…I’ll contact the landlord… “What’s included in the rent? …Are appliances included?”’ [Kate]

This meant participants tailored client expectations to rental market constraints:

‘We talk about, “Realistically, what can you afford?” …Sometimes I think our clients think that we are realtors too, “I’d love a two-bedroom, two-bath, with a washer/dryer on the first floor for $400 a month.”’ [Alyssa]

These excerpts illustrate ways respondents absorbed search costs for both co-signers. Absorption helped HF clients to get rehoused by quickly connecting them with landlords who would lease-up service recipients and reduced the investments that landlords had to make whilst finding a new tenant.

That said, participants sometimes delegated managerial responsibility for search costs to another party. HF clients varied in self-sufficiency. Whilst a portion of clients could not independently manage search costs, others could do it on their own. Respondents delegated search costs to clients who were self-reliant:  

‘There’s times when in the past that I worked with Housing First clients and they’re fairly independent. And I’ll just give them like, “Here’s the searches that I found. Why don’t you contact the landlord?”’ [Kate]

At other times, they delegated search costs to help clients develop skills that are needed to independently participate in rental market exchanges:

‘I have [a colleague] who was working with [my client] …And she is trying to move…And [my colleague is] teaching her the skill of, “You contact them. Make an appointment. And then I’ll go with you to go to look at the apartment”, to kind of support her in asking those questions.’ [Laura]

Other respondents delegated search costs to clients who habitually violated their lease out of frustration:

‘This guy threw a party and looked me in the eye and said, “I had a party last night…And we trashed it.” …How can I advocate? I don’t know how to spin that…He went out and found the numbers on his own…For me to go seek out something that he might instantly destroy like that, it is harder for me to find motivation to go do that…’ [Tony]

Respondents thus delegated search costs for different reasons. On the one hand, they delegated search costs because independent clients did not need assistance or dependent clients needed a chance to develop new skills. On the other hand, they delegated search costs to unruly clients out of frustration or to teach them a lesson. 

Bargaining costs

Participants managed bargaining costs whilst their clients submitted a lease application. They absorbed bargaining costs by helping clients prepare a lease application. This meant determining what information a landlord required and then gathering those documents:

‘I just made sure I had the proper paperwork. I called the landlord, “What do I need for this?” …All she really needed was SSI statements and doctor’s note of her diagnosis…We did that. And she was on a waitlist…’ [Jane]

Participants negotiated the terms of a lease during these conversations. Wendy convinced a landlord to lower their rent so her client could use their voucher:

‘I negotiated with the landlord one time to lower the rent so it would be within the fair market rate…Usually, if I go in, “Hey, I am with [Housing First]”, they’re like, “Oh yeah, that’s fine.”’

Whilst Mandy tried to delay the payment of security deposits when going through a list of questions with prospective landlords:

‘How much is rent? Income requirement. Do you do a background check? Is there a security deposit? If there’s a security deposit, are you willing to do a payment plan towards that?’

And one housing specialist expedited unit inspections to facilitate move-ins:

‘If a unit doesn’t pass, I’ll contact the landlord, specify what repairs need to be done, and they’ll do the repairs…If somebody’s moving in there, then I’m going to do a quick [inspection]…so they can move in as quickly as possible.’ [William]

Respondents described difficulties they confronted whilst absorbing bargaining costs for clients. All HF clients submitted a lease application that violated one or more screening criteria that landlords used to select tenants. Participants invented a ‘sales pitch’ to assuage landlord concerns:

‘…Landlords that don’t participate in programs like this, we have to let them know what’s up. Because it’s Housing First, but it’s not housing only…We provide intensive case management.’ [Jade]

When clients wanted to stay in their unit at the end of their lease, respondents had to manage bargaining costs during the recertification process. This was a stressful process because participants had to coordinate multiple stakeholders in a limited timeframe:

‘It's like at treasure hunt…You have to get all of [the documents] at the right time. And then, you have to have the sit-down meeting. And then, they have to come and inspect your apartment…It's very cumbersome.’ [Celeste]

This data thus shows participants absorbed bargaining costs for both co-signers. They absorbed bargaining costs for clients by negotiating HF leases on their behalf. Doing so reduced housing barriers that stop clients from getting rehoused. Respondents also absorbed bargaining costs for landlords by helping them satisfy HF programme requirements.

That said, participants sometimes delegated bargaining costs to someone else. To whom they assigned managerial responsibilities varied by the problem(s) they confronted. A housing specialist who worked for one HF programme delegated screening responsibility onto landlords:

‘I encourage [landlords] to look at a person’s record and try to screen people for appropriateness, rather than maybe having situations where the client doesn’t work out…’ [William]

This allowed HF programmes to partly blame landlords when a client’s tenancy failed. Respondents also delegated bargaining costs to clients who continuously broke their leases:

‘We had to give [one client] a reality check, “You will be on the street if you don’t take the proper steps…” …We’re not going to be actively meeting with landlords and, “Yeah, he’s a great guy.” …I’d rather be honest with a landlord.’ [Tony]

Delegating bargaining costs to clients helped some participants maintain their reputation with landlords. Lastly, participants referred clients to non-profit agencies who provided resources that are needed to lease-up:

‘There used to be a security deposit that went with the person…And [HF] stopped doing that…You have to see if [the client] can pay for the security deposit…And that’s oftentimes when [loans from a non-profit group] come into play…If there’s a previous loan that’s out there, as long as it’s paid off…it’s oftentimes used for that.’ [Thomas]

An outside loan for security deposits helped clients manage a salient bargaining cost. Initially, this delegated managerial responsibility to an outside agency that the client assumed over time as they repaid the loan.

Conclusion

In sum, HF caseworkers lease-up clients by managing search and bargaining costs at the beginning or renewal of a rental market exchange. Caseworkers absorb or delegate said costs for each co-signer at different stages of the lease negotiation. This essay extended my new article by demonstrating TCE’s relevance to additional stages of the leasing process and gave further evidence that housing counselling services are essential to HF casework. My findings can inform future research on housing counselling services by conceptualising problems that caseworkers help clients address and the strategies they use to help clients perform rental market exchanges.

References

Coase, R. H. 1960. “The Problem of Social Cost.” The Journal of Law and Economics 3:1–44. https://www.jstor.org/stable/724810

Henwood, Benjamin F., Stanhope, Victoria, and Padgett, Deborah K. 2011. “The Role of Housing: A Comparison of Front-line Provider Views in Housing First and Traditional Programs.” Administration and Policy in Mental Health and Mental Health Services Research 38:77–85. https://doi.org/10.1007/s10488-010-0303-2

Tsemberis, Sam. 2010. “Housing First: Ending Homelessness, Promoting Recovery and Reducing Costs.” Minneapolis, MN: Hazelden Publishing.

Williamson, Oliver. E. 1979. “Transaction-Cost Economics: The Governance of Contractual Relations.” The Journal of Law and Economics 22(2):233–261. https://doi.org/10.1086/466942