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Barratt and Redrow have announced fund-raisings of £720m and £150m respectively as they attempt to strengthen balance sheets decimated by the recession.

After announcing its full year results to 30 June this morning, Mark Clare, Barratt’s chief executive, said: "The board has decided 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."

Meanwhile, Redrow announced a fundraising of £150m and the acquisition of Harrow Estates from the Bridgemere stable of companies owned by Redrow chairman Steve Morgan. The deal involves the acquisition of five freehold land assets and options to acquire seven further strategic land assets, together with the employees of Harrow Estates, for £15m.

Alongside the cash call, the company has also reduced its debt facility from £425m to £250m.

Morgan said: "The proposed rights issue will strengthen Redrow's balance sheet and position Redrow for growth. We are returning Redrow to its traditional focus on a great product in the market for family housing. We now need to enhance our ability to acquire land through selected acquisitions. This is all part of our strategy to steer the business back to delivering a much improved return on capital employed.

Redrow shares rose 4% to 242p in early trading and Barratt shares were up by a similar level to 278p.

There was a broadly favourable reaction in the City to the news. Liberum Capital analyst Charlie Campbell said the fact Barratt had raised than the expected level of £500m showed the company had good institutional support. Meanwhile Kevin Cammack at Cenkos Securities said the Redrow cash call was worth backing, given Morgan’s track record.