Research on the practical problems of allocating homes according to need has recently been eclipsed by heated debate on the privatisation of public housing. In the wake of the British government's new commitment to the idea of state-subsidised accommodation, this paper reconsiders the problem of discretion in effecting welfare transfers. It explores how nine local authority housing departments process applications from people with health problems and mobility needs. We argue, contrary to the prevailing wisdom, that discretion is inevitable, necessary and often desirable when assessing housing needs and matching needy applicants to homes. Neither total market freedom nor complete bureaucratic constraint seem likely to solve the problem with social housing. However, an approach balancing unavoidable discretion with rigorous accountability might be a fruitful way forward.