Lambeth Council has written to the government seeking urgent reform of national legislation governing tenant management organisations (TMOs), following serious concerns about the management of the estates in the borough.

The letter to Steve Reed, the Secretary of State for Housing, Communities and Local Government, comes after tenants raised significant issues about the performance of the Loughborough Estate Management Board (LEMB).

The concerns over the TMO prompted a detailed audit review that identified failings by LEMB in its financial management, governance and procurement.

The review highlighted substantial spending on foreign travel and gifts by the TMO without adequate justification. In response, Lambeth has referred LEMB to the Financial Conduct Authority regarding the potential misuse of funds involved.

Cllr Danny Adilypour, Hackney Councils’s deputy leader and cabinet member for housing, investment and new homes, said the LEMB case had highlighted “gaps” in councils’ powers to act on behalf of tenants whose TMOs were underperforming.

In his letter to Mr Reed, Cllr Adilypour said: “The detrimental operations of some TMOs have led to serious negative impacts for tenants and the current legal framework binds the hands of local authorities to take decisive action against poorly operating TMOs.

“Whilst a number of TMOs deliver good services, Lambeth’s experience is that this is not always the case. Many of these issues are illustrated by the significant and ongoing failures by one TMO in the borough, Loughborough Estate Management Board.”

The council has already taken action after LEMB sent a letter to residents containing unsubstantiated allegations and attempted to hold its Annual General Meeting online, contrary to its own governing rules. Lambeth has intervened to ensure residents can participate fully and safely, even offering the use of council offices and appropriate security measures.

In his letter to Mr Reed, Cllr Adilypour argues that, despite these steps, the council’s ability to act has been “heavily constrained by current TMO legislation”. He said the terms of the Modular Management Agreement (“MMA”) for TMOs – published by the government in 2013 – were now out of date “and do not take into account the raft of safety-related legislation in the last decade”.

Cllr Adilypour added: “There are significant changes that need to be made to the MMA to ensure that residents can be confident that their housing management is fit for purpose and so that they are not left to suffer in the same way as residents living on the estate managed by LEMB.“

Lambeth Council is urging the government to urgently strengthen the regulatory framework for TMOs, including calling for:

• Stronger rules for continuation ballots – where residents vote on whether they want their TMO to continue managing their council housing services – with clear consequences if TMOs do not follow these
• Quicker and more effective ways to take action when TMOs perform poorly
• Powers for councils to end agreements when there are serious contractual breaches
• Powers to step in when a TMO doesn’t follow its own rules
• Limits on how long someone can serve on a TMO committee
• The ability to update the Modular Management Agreement when laws change.

Cllr Adilypour said these changes would help councils to tackle “the significant challenges caused to residents by unfit TMOs” – and would also “help improve the experiences and accountability for residents in Lambeth and across the country.”

Lambeth officers will now work with officials at the Ministry for Housing, Communities and Local Government to provide further detail on the legislative and regulatory changes required.