Connaught’s £7m-a-year contract to maintain 15,000 council homes across the north London borough will be terminated next February.
Barnet Homes will look for a replacement contractor 12 months before the official end of Connaught’s contract on March 2012.
A Barnet Homes statement said: “Barnet Homes has served notice on our repairs contractor Connaught that we intend to terminate their contract in February 2011.
“We would like to assure residents that we are implementing transition plans as a matter of urgency, and we are seeking to minimise any disruption to our repairs service.”
The news will be another blow to Connaught which has seeen its share price drop to 11.5p from £4.44 following a series of profit warnings.
Clients are known to be nervous about dealing with the firm as it fights for survival.
Rivals Mears and Rok have already confirmed they have held talks with a number of Connaught customers about taking over work.
One rival told the Enquirer: “Everyone can see Connaught is in a bad place so clients have to keep their options open.
“Barnet won’t be the first housing body that decides to look elsewhere.”