The council will provide the land, Kier and an international pension fund the finance for a mix of market sale, new, rental and affordable housing.
Kier said it is in talks with other local authorities, county councils and private land owners about using the innovative, institutional investor-backed model to build thousands more homes across the country.
The Kier-Kent deal is one of the first of its kind in the country to get off the drawing board.
The construction group hopes the pension funds, local housing provider, developer and council tie-up will provide a model for others to follow.
As part of the deal, Kier will fund and develop the sites, providing private market and affordable housing which will be leased to a leading registered provider, creating a residential investment income.
Following the completion of the land transfer, Kier will seek planning permission to build 152 new homes on three sites in the county with a mix of tenures to meet local needs.
Kier Property managing director, Nigel Turner, said: “The Kier team has brokered a highly innovative development that is being watched closely by other local authorities and registered providers.
“We see this offer as creating a modest scale solution to meeting housing need and we are keen to roll this out with other public and private sector clients.”
The long-term investment is provided by a fund that seeks to invest pension funds into affordable housing projects to provide stable returns.
The opportunities presented by developments such as the Kier–Kent initiative are becoming increasingly attractive as a low-risk source of regular income from inflation-linked rents.
Local communities will also benefit from the Government’s New Homes Bonus that provides councils with extra cash when new house building projects are completed.
In a separate development, using the same funding model, Kier is reviewing options for new homes on land owned by Kier in Ashford. In total, the two proposals will deliver 260 new homes for people in Kent.