UK housebuilders Barratt Developments and Redrow have announced plans to raise a combined £843.5 million to reduce debt levels and to buy cheap land during the housing slump.

Barratt hopes to raise a net of £693.5 million from new shares, while smaller rival Redrow is aiming for £150 million from shareholders.

Mark Clare, Group Chief Executive of Barratt Developments, commented: "This has been an intensely difficult year for the group following the sharp decline in the UK housing market. In the first half, as prices fell, we drove sales and reduced stock and debt levels. In the second half we have been able to maintain price levels and increase our reservation rates, with these encouraging trends continuing through the summer into the autumn."

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Barratt reported a debt of £1.3 billion and at the start of this month Redrow reported its worst annual loss of £140.8 million.

Ms Clare continued: "It is now an appropriate time to substantially strengthen the company's balance sheet and reduce its debt levels via a Placing and a Rights Issue. This will also enable the group to develop a number of its existing sites and to take advantage of land purchasing opportunities as they arise."

(CD/KMcA)