A major row is heightening over the eviction of 74 households whose homes will then be used to house homeless families.

It is to be the subject of a meeting this week called by a local MP.

Peterborough City Council – already in the headlines because of its £1.4m housing over-spend due to its use of Travelodge accommodation for homeless families – has done a deal with the owners of a development, St Michael’s Gate.

Magic Homes is carrying out the evictions on behalf of Stef and Philips, a social housing provider which started out as an estate agent in north London.

Peterborough Council has signed off a deal for St Michael’s Gate to be used as temporary accommodation for homeless families at a cost of almost £1m a year.

Redevelopment of the estate will see the number of properties available to the council increase from 74 to 98. The deal has a break clause after two years.

A petition against the evictions has received over 1,000 signatures, while MP Steward Jackson is holding a public meeting this Friday.

The deal, signed off by the Conservative leader of the council, has also been called in by the authority’s scrutiny committee.

The residents of St Michael’s Gate said they were sent letters “out of the blue” by Stef and Philips after it bought the development from Akelius.

One resident, Tony Roberts, said: “I understand needing to house the homeless, but can’t see sense in making 74 families homeless to do this.

“A lot of the people don’t have the funds to pay a deposit for somewhere else or letting agents’ fees.

“If these people don’t have the funds to move, will they be put on the streets and if so will they then be sent back to live in one of these houses.”

Adrian Chapman, service director for adults and communities for Peterborough City Council, said: “Like many cities across the UK, Peterborough currently has a severe shortage of properties available for temporary accommodation and an increasing number of people needing housing support.

“We sincerely regret that the current tenants of these properties will have to find somewhere else to live, but that is entirely a decision for the new owners and will happen whether or not we use the homes. That said, we will of course be supporting these residents if they require help finding alternative accommodation.

“If we didn’t make use of these properties, Stef & Philips Limited would rent them out to another organisation, most likely another council.

“It would be foolish of the council to take this approach as the current tenants would still face eviction, it would not help address our need for additional housing and could result in the council being responsible for meeting the needs of residents from outside Peterborough placed in St Michael’s Gate.”

Stef & Philips, based in London, offers a number of social housing schemes and is a member of the SAFEagent scheme.

According to its website, it began as an estate agent in north London in 2006, but in December 2012 turned to the social housing sector and builds around 300 accommodation units each year.