A beleaguered housing firm will continue to control most of the council stock despite its dismal record, a commission has decided.

The Lambeth Housing Commission, led by the same party that set up Lambeth Living (LL), decided it did not want to “take focus off tenants” by taking control of LL’s 34,000 properties “in house”.

The apparent vote of confidence in the management organisation – which has been hit by a succession of bad stories – was dismissed as “a massive missed opportunity” by opponents.

Dogged by claims of poor service and incompetence since its creation in 2006, LL suffered a string of shocking stories, including corruption at board level and tenant claims of poor service.

LL also failed to get much of the money available under the Government’s Decent Homes Programme – the main reason it was created – it hoped for, leading to more questions about its viability.

That led the council to starting the commission, which took nearly a year to make its decision.

Its chairman, the council’s cabinet member for housing, Councillor Lib Peck, said the exercise has been worthwhile.

She said: “We are not where we want to be, we haven’t been in Lambeth for 10 years at least, but we have some improvement. Taking LL in house was a real option.

“But it would take up to a year and not necessarily improve anything and take the focus off tenant service.”

The commission made 31 recommendations, including spending money on house improvements quicker and having tenant representation on the LL board.

There are also subsidiary aims in keeping with the council’s co-operative ideals – including using the unemployed and offenders to work on empty homes.

But real concerns remain over the transparency of LL – it still holds meetings in secret and is not subject to Freedom of Information requests for example.

Ashley Lumsden, leader of the Liberal Democrats in Lambeth, has advocated creating more competition to LL and tenant-led companies.

He said: “This is a huge missed opportunity. We needed something a lot more radical. What has really changed?”

Ron Hollis, chairman of Lambeth’s Tenant Council, said he was one LL’s biggest critics, but conceded keeping it was the “least bad” option.

He said: “Now it is here we need to make sure it works for and delivers for tenants. We are at the beginning of a process. There needs to be a more long term plan on housing.”

Last month, the former chairwoman of LL avoided jail despite swindling £90,000 in benefits and lying to obtain a £38,000 discount to buy a council flat.

Asuman Ozkan, 42, former chairwoman of the LL board, avoided a jail sentence after fraudulently claiming about £90,000 in income support, housing and council tax benefits.

She also fraudulently obtained a £38,000 discount to buy her £140,000 council flat in King’s Avenue, Clapham, in Lambeth Council’s right to buy scheme, alongside her estranged husband Joel Arizie.

In January Cathy Deplessis, chief executive of LL, resigned.

She never gave any explanation for her departure.

And last year, the GMB union revealed LL paid between £1,000 and £4,500 for 20 consultants.

LL denied the figures, but again refused to disclose any other information on its consultancy spend.

The commission’s report will be debated at a council meeting on Monday. To see a copy of the report go to lambeth.gov.uk.