Course owner the Jockey Club says the proposal, with Redrow Homes, is "for the long-term good of British racing".
A new all-weather venue, most likely located at Newmarket, would be built as part of the plans.
Should the proposal go ahead, Kempton's famous King George VI Chase would move to Sandown, located six miles away.
Racing will continue at Kempton until at least 2021, and the redevelopment will only proceed if more than £100m is raised from the sale and the all-weather circuit is given the go-ahead.
Three-time champion trainer Nicky Henderson tweeted: "The King George isn't the same race at Sandown. Kempton is a track National Hunt racing cannot afford to lose. It's that simple. Very sad news indeed."
Jockey Andrew Thornton, who won the King George on See More Business in 1997, questioned why money raised from the potential sale would be invested at Newmarket, where Flat racing - not jumping - takes place.
"There wasn't even a muttering around the weighing rooms of this coming," Thornton told BBC Radio 5 live. "That worries me. Why haven't trainers and individuals had a say? It seems very close knit.
"From a jockey's point of view, it is one of the greatest tracks in the country."
Roger Weatherby, the Jockey Club's senior steward, said the proposal were part of a "series of projects" from the grassroots of racing to the top level.
He added: "We must show leadership with the assets we have and, where merited, take tough decisions to help our sport to keep moving forwards."
The proposal was a response to Spelthorne Borough Council's local plan for 2020, identifying where development could take place in the area.
Council leader Ian Harvey says he "strongly" opposes the development of the racecourse.
Kempton, which opened in 1878, is known as the host of the prestigious King George VI Chase, run for the first time in 1937.
The Grade One National Hunt race, usually held on Boxing Day, was won by Kauto Star a record five times.
The course's other notable races are the Sirenia Stakes in September and February's BetBright Chase.
The historic Kempton Park racecourse could be closed to make way for 3,000 homes as part of plans to raise £500m to invest in horse racing.