I know nothing at all about this subject - but I have a friend who was in a hostel in Kenbury Street SE5 for about 2 years and eventually got a lovely flat in St George Wharf at Vauxhall - a social housing part of the development managed by Notting Hill Housing. I'm not saying is is easy - after all I would describe 2 years of bidding as persistent effort on my friend's part. But he did manage it. He got his flat 2 years ago. My feeling is he would have been less likely to have got his successful offer if he had moved out of the hostel into private rented. But as I say I am just articulating a hunch. Maybe someone else can advise you with benefit of full knowledge of the system.