The partners will develop housing with a mix of tenures speeding up the development of Kier’s residential land bank through a new cash efficient approach.

This will allow Kier to increase construction to around 500 units per annum by 2020.

Under the deal Kier holds a 69% stake, with Homes England taking 26% and Cross Keys Homes 5% in the joint venture.

Kier will receive £27m for its initial contribution of four development sites, which will be financed by a loan to the JV from Homes England.

The JV partners will contribute £47m of equity funding relative to their economic ownership. A deal is also on the cards with third party lenders to inject up to £80m for the future schemes.

Haydn Mursell, chief executive of Kier, said: “This joint venture is an important milestone, bringing Homes England, Cross Keys Homes and Kier together in a new strategic partnership which will help address the national housing deficit.

“As joint venture partners, we have a shared ambition to work collaboratively to build more affordable homes across the country.” 

Nick Walkley, Chief Executive for Homes England, said: “At Homes England, we’re using our finance, land and expertise to build more homes in areas of greatest need.

“Our innovative deal with Kier and Cross Keys Homes shows how we intend to form new commercial partnerships to increase housing supply, address affordability issues and generate value for the public purse.”