The housing body which owned the flat where toddler Awaab Ishak died following exposure to mould will be stripped of new government funding, Michael Gove has announced.
The housing secretary said Rochdale Boroughwide Housing (RBH) will not receive its expected £1m funding from the Affordable Homes Programme (AHP) or receive any new AHP contracts for new homes until the regulator of social housing has concluded its investigation and the association can prove it is a responsible landlord.
Ministers will also continue to monitor housing standards of RBH properties closely, working with the regulator and ombudsman to ensure tenants have appropriate housing.
As part of a wider crackdown on poor standards within social housing, Mr Gove has also confirmed his intention to block any housing provider that breaches the regulator's consumer standards from new AHP funding until they make improvements.
He will also consider stripping providers of existing AHP funding unless construction has already started on site.
Speaking to Sky News' Kay Burley, the minister said: "Housing associations should be looking after their tenants first, and we're not giving money to people who are not even looking after their existing properties to build new properties.
"They've got to make sure that they look after their tenants and It would be, I think, wrong of us to give public money to an organisation that is failing until it gets its own act together."
Last week, a coroner ruled that Awaab, two, died from a respiratory condition caused by mould in a one-bedroom flat in December 2020 which was managed by RBH association.
The housing body has admitted that it "got things badly wrong" and said it has started to take "immediate action".
Awaab's parents, originally from Sudan, had repeatedly complained about the mould.
His family has accused the housing association of racism, saying there was "no doubt at all" they were "treated in this way" because they are not from the UK.
The toddler's death sparked anger over the poor state of the home he and his family were forced to live in - leading to RBH chief executive Gareth Swarbrick being sacked.
In response to Awaab's death, Mr Gove put social accommodation providers "on notice" and said it "must never be allowed to happen again", in a letter to every English council leader and social housing provider
He said all councils and housing associations must raise the bar dramatically on standards and demanded urgent action where people complain about damp and mould.
The government has today awarded a share of £14bn for seven areas with high numbers of poor privately rented homes to crack down on rogue landlords and test new approaches to driving up standards.
This includes £2.3m for Greater Manchester - including Rochdale and surrounding councils - to increase the use of fines where a landlord is found to have committed an offence; £678,000 for Leeds to use behavioural science to change culture among landlords and £1.1m for Cornwall to create a database of private rented accommodation in the area.
Mr Gove said: "If you can't even run the homes properly that you are currently responsible for, then you certainly can't be building new homes.
"[RBH] have got the resources they need in order to deal with the problems that are currently preoccupying me and many others.
"It is not right that taxpayers money should go to allow an organisation to expand, particular an organisation that was paying its chief executive north of £150,000. They should not be getting extra cash until they use the money they already have to improve housing.
"And I'm saying to all housing associations that their responsibility is to deal with the damp, the mould and some of the other problems that have been identified by campaigners that are meaning there are thousands of tenants who are living in homes which are not fit for human habitation."
The regulator of social housing has demanded evidence from all housing association and local authority landlords this week showing they are identifying and dealing with damp and mould issues in their homes - and the government says the regulator will take action where standards are not being met.
Shadow housing secretary Lisa Nandy said rules to protect private rented tenants also need to be both enforced and strengthened.
"It's right to stand up to failing social landlords but there is no excuse for not showing the same regard for millions of private rented tenants who live in squalid, unsafe conditions and are evicted if they dare to complain," she said.
"After years of broken promises, the government has taken no action to strengthen rules to protect those families. There is a political consensus on this, so there is no excuse for more delay."