Abstract In 2015 the Housing Act was revised in order to further regulate the social housing sector in the Netherlands and thereby improve the steering possibilities for the central government to coordinate housing associations. This included local performance agreements for social housing policy obtaining a legal status. By introducing this policy instrument central government seeks to facilitate and ensure the tri-partite cooperation between municipalities, housing associations and tenants’ organisations in order to release funds by housing associations for social benefit. This should improve the position of municipalities and tenants’ organisations in social housing, and improve legitimate policy making. In this paper the main research question is: How are local performance agreements implemented targeting increased societal legitimacy in local social housing policy making, and what are its strengths and weaknesses in three selected cases in the Netherlands? A case study research design was used involving three local embedded case studies. As a theoretical framework the Contextual Interaction Theory was used. Data collection involved expert interviews and review of policy documents. Results reveal several weaknesses that impede the implementation of performance agreements, including issues in the broader governance regime and context, as well as issues with the inter-organisational structure and stakeholder interaction regarding the tri-partite cooperation between the key actors. This has to do with the precarious role of the tenants’ organisations in the process, and the local housing policy as the basis of local performance agreements. Results also show that implementation of performance agreements is more difficult in cities with dense urban areas.