Newham Council has signed a 20-year £174 million contract with Swan Housing Group under the Government's Private Finance Initiative that will see improvements to around 1,300 properties in Forest Gate.

The contract will ensure that around 900 rented council dwellings are brought up to the Government's Decent Homes Standard by 2012 with new kitchen and bathroom fittings, windows and heating systems. There will also be external works to around 400 leasehold properties.

The council's private sector partner in the project, Swan Housing Group, will manage and maintain the properties for the next 20 years. In the first three years alone, £45 million will be spent on homes in the area.

The not-for-profit housing association will be responsible for caretaking, gardening, repairs and dealing with nuisance. They will improve communal areas and right to buy homes in the area.

Although the project will be funded by the private sector, the council will continue as the landlord, owning the properties and setting the rents. Tenant and leaseholder rights will not be affected.

Mayor of Newham Sir Robin Wales said: “The PFI project is a key element of Newham's housing strategy. It will make an important contribution to our plans for bringing every council dwelling up to the Decent Homes Standard by 2012 as well as helping to tackle anti-social behaviour and making Forest Gate a more attractive place in which to live.”

Councillor Andrew Baikie, Newham's executive member for housing, added: “The scheme has already benefited from the involvement and enthusiastic support of local people. There has been an extensive consultation process in which tenants and leaseholders had a chance to have a say. Swan Housing Group put forward some ambitious proposals.”

Swan Housing Group took over the management of the homes on February 2. Improvement work is expected to finish by early 2012. People will not have to move out of their homes while the work is in progress.

The Government will provide £4.9m per year through PFI credits over the 20-year duration of the scheme. This pays for the refurbishment element of the scheme.

Newham's Housing Revenue Account will fund the management and maintenance element through a combination of housing rents and existing HRA subsidy.