LONDON (MarketWatch) -- U.K. home builders Barratt Developments and Redrow on Wednesday announced plans to raise around 870 million pounds ($1.42 billion) in share sales that will strengthen their balance sheets and reduce debt following the slump in the U.K. property market. Barratt (UK:BDEV 270.80, +2.30, +0.86%) said it will raise 720.5 million pounds through the sale of 618.4 million shares as it also said a degree of stability has returned to the housing market and reservation rates are running ahead of its expectations. The cash will allow Barratt to both reduce its outstanding debt and to free up working capital that it will invest in its existing land sites and potential future purchases. The company said it will raise the majority of the cash -- 545.5 million pounds -- through a rights issue, where existing investors will have the right to buy 1.3 new shares for every one they already own at a price of 100 pence a share, or a 63% discount to Tuesday's closing price. But because the company believes some existing investors may be constrained over their ability to take part, it will sell a further 175 million pounds of shares to new investors at a price of 240 pence. Those investors will also be able to take part in the rights issue. Analysts and investors had been expecting both Barratt and Redrow to raise cash, after similar share sales by rivals including Taylor Wimpey (UK:TW. 43.37, +0.19, +0.43%) , Bellway (UK:BWY 896.50, +4.00, +0.45%) and Berkeley Group Holdings (UK:BKG 907.00, -4.50, -0.49%) . Shares in Barratt rose 3.5% in early London trading Wednesday and Redrow (UK:RDW 240.00, +6.50, +2.78%) climbed 3.8%. Both stocks have tumbled over the last couple of years as U.K. house prices have fallen heavily. Shares in Barratt are down nearly 80% from their high in early 2007 and Redrow has lost around two-thirds of its value over the same period. Redrow said shareholders in its 150 million pound rights issue will be able to buy 13 new shares for every 14 they already hold. The shares will be sold at a price of 105 pence each, or a 55% discount to Tuesday's closing price. "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," said Steve Morgan, the group's chairman. Morgan owns 29.9% of Redrow and has committed to buy 44.5 million new shares under the rights issue.

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