COUNCIL houses in Gillingham could be sold off within three years to raise money to create a city centre for Medway.

Medway Council's cabinet will be told tomorrow that turning Chatham into a city centre is the top investment priority for the area.

They say it will promote "economic, physical and social regeneration" as well as foster a sense of citizenship in the community. But fears have been raised that the sell-off could lead to rent rises for tenants.

Medway inherited 3,540 houses and flats from Gillingham council. Council homes in Chatham, Rochester and Strood were sold by Rochester upon Medway council to Medway Housing Society in 1990.

Labour councillor Bill Esterson said: "Many people chose to live in council housing because it provides security, but this would see a phenomenal increase in rent. Medway's city centre in Chatham should be funded in its own right, not by disadvantaging residents by flogging off all our council housing."

Liberal Democrat Cllr Alan Jefferies said some tenants were unhappy with the way their homes were being managed. "Personally I would have preferred the housing stock to stay with the council, but as long as the residents are polled and they get what they want, then I am happy.

"Many residents are probably not aware that with private ownership renting can become very expensive." However, he added: "The funds earned should be spent on projects in Gillingham and Rainham where they belong rather than being put into the general pot."

Conservative deputy leader of the council Cllr Alan Jarrett said he could not comment further until after tomorrow's meeting.

Officers will tell the Conservative-led Cabinet: "The council has carried out some preliminary investigation into disposing of its housing stock, as a method of achieving investment. The consideration of transfer will remain a key theme under the council's approach to strategic asset management and will be appraised as part of the Somewhere to Live Best Value review this year."

Other priorities include the creation of the University of Medway, regenerating Rochester riverside (where two developers have pulled out after investigating the council's plans) and replacing temporary classrooms in Medway's schools.

Improving the killer A228 on the Hoo Peninsula is the top transport priority. The programme of long-term investments is set out in the council's capital strategy and corporate asset management plan. It has to go to the Government Office for the South East by the end of next month.