Five Kent councils could join forces in an ambitious bid to create a company to look after housing for 21,000 council tenants.

The five authorities are Dover, Shepway, Ashford, Canterbury and Thanet.

Council chiefs believe the move to create an arms-length trust to manage their housing stock and housing services would benefit tenants, potentially saving as much as £700,000.

They have stressed that the move does not represent a move to force transfer tenants out of council control.

A related plan for the five councils to team up and build new social housing through a local housing company is also being considered.

While each of the five councils would continue to be responsible for their own tenants and continue to set rents, a management board could take charge of maintenance and administration. About 270 council staff who work in housing could be transferred to the new trust.

Paul Naylor, deputy chief executive of Ashford council, which has 5,500 council tenants, said: "With five authorities responsible for 21,000 tenants, there are opportunities for shared procurement of maintenance and for different arrangements for back-office support services. Savings could be re-invested back into improving services for tenants."

With increasing pressure on council budgets, it was becoming more difficult to find money to improve stock, he added.

"It is not easy for authorities to maintain their various maintenance commitments in an environment in which rent levels are controlled," he said.

Velia Coffey, director of community services at Canterbury City Council, said: "A feasibility study has shown that, as well as providing an opportunity to improve the quality of services to council tenants, the setting up of a Shared Service Vehicle (SSV) will provide efficiencies and cost savings for the both the housing service and the council more generally."

Councillors from all authorities are expected to signal their support for the initiative in the next few weeks but if agreed, the scheme is unlikely to get off the ground before April 2010.