Council tenants could be asked to vote before the end of the year on the sale of their homes to a new landlord.

Cherwell District Council is planning to sell its stock of properties to a housing association to help ease financial difficulties. The sale of the 4,000 homes could raise £50m.

District treasurer Les Angel said in a report funding problems were caused by the reduction in interest rates, the withdrawal of Gov- ernment negative housing subsidy, and an increase in costs.

This year's council tax precept was kept to six per cent by drawing £2.25m from reserves -- something that could only be done once in every ten years according tto Cllr Andrew Payne, the council's executive member for resources.

Mr Payne said the council had lost £650,000 through low interest rates, £450,000 in discontinued grants, while insurance was up by £350,000 and extra pensions provision had cost £100,000.

He said that if the sale of council houses did not go through it would add extra pressure to council finances.

The council has applied to the Government for permission to sell its homes.If this is granted, tenants will be balloted next month. If they back the move, the transfer of homes could take place in Spring 2003.

The council says a sale would allow repairs and improvements to the housing stock to go ahead at sustainable rent levels.

Ten per cent of the proceeds would go to the Government. The rest would be used to build housing for rent and to boost council finances.