Housing Secretary Michael Gove has said housing providers that fail to address safety and quality concerns will not get new government funding to finance expansion.
It comes after a coroner ruled that the death of Rochdale toddler Awaab Ishak was caused by exposure to mould in his home.
As part of the new measures, the association involved, Rochdale Boroughwide Housing (RBH), will not receive £1m of expected funding.
Mr Gove told the BBC: “We are not giving money to organisations which are operating incompetently and in some cases callously.”
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