Bouygues has been chosen to deliver the first phase of a major regeneration project in Barking and Dagenham, East London.
The local authority and its development partner, East Thames, chose the contractor for phase one of the scheme, which has a construction value of around £41.5m.
The contract includes 190 homes and a new energy centre.
It forms part of Barking and Dagenham’s Gascoigne East masterplan, which will involve the construction of 1,575 homes over nine years, as well as a primary and secondary school, a community centre and public space.
The masterplan is part of the local authority’s wider estate renewal programme, which will include the refurbishment and demolition of existing properties on estates across the borough and the construction of new social, affordable and private homes.
Homes built in the first phase will be available by 2018 and will be a mixture of affordable rent, shared ownership and private sale.
The deal comes as a new report by marketing group 3Fox International revealed increasing numbers of councils are setting up their own housing development companies.
It said councils were looking for innovative ways to generate income to fund services, with revenue from these companies a key ingredient.
According to the research, 12 per cent of English local authorities have already set up housing companies, with 34 per cent saying they are “actively” considering it.
Barking and Dagenham was one of the first councils to set up its housing company, Reside, which is delivering 477 homes.
The council’s divisional director of regeneration and economic development Jeremy Grint said: “For us, one of the contributing reasons for setting up a housing company was the potentially beneficial effect to regeneration in our borough by providing a much-improved gateway into our largest housing development scheme, Barking Riverside.”
The London Borough of Ealing set up a housing company in 2014 called Broadway Living. But its executive director of regeneration Pat Hayes questioned whether or not councils should be seeking to generate revenue in this way.
He said: “I am surprised so many authorities have set up housing companies or are thinking about it.
“We set ours up to address a specific housing issue, namely, the lack of good-quality, institutionally funded, market-price rental accommodation.
“I am slightly concerned that some authorities may see housing companies simply as a way of generating a financial surplus, rather than a means of intervening in the housing market to catalyse the delivery of intermediate-price accommodation.”
Broadway Living is planning on building 1,500 new homes in the coming five years.
The report was based on a survey of 112 councils across England.
In January, Construction News reported that at least four councils have put in place plans to establish their own housebuilding companies since December 2014 alone, with a leading consultant saying that many more are looking to follow suit.