Barratt, Redrow up dividend payouts as UK housing recovery picks up

By Brenda Goh

LONDON, Feb 27 (Reuters) - Barratt Developments (LSE: BDEV.L - news) and Redrow (LSE: RDW.L - news) have become the latest housebuilders to unveil increased dividend payouts as Britain's housing market emerges from its slowdown.

Housebuilders have been buoyed by the government's "Help to Buy" scheme, launched last year to free up lending to home buyers, and are also reaping profits from selling homes built on land that they bought cheaply during the financial crisis.

British house prices rose an average 8.4 percent in 2013, mortgage lender Nationwide (LSE: CCDS.L - news) said in January.

Housebuilders Persimmon and Taylor Wimpey (LSE: TW.L - news) said this week they would either pay out cash to shareholders or accelerate plans to do so.

Barratt, Britain's largest housebuilder by volume, said on Thursday it expected to pay out around a third of earnings in dividends over the three years to 2016. It said that, according to current analyst estimates, this would total around 365 million pounds ($607 million).

The company, which paid its first dividend in five years last year, said it would pay an interim dividend of 3.2 pence in May.

The mid-sized housebuilder Redrow said it would pay its first interim dividend in six years of 1 penny per share, amounting to 3.7 million pounds, after pretax profit rose 107 percent to 47.5 million pounds in the first half.

"We are seeing a very different mortgage market today. The banks started to lend at the back end of 2012 ... And obviously with 'Help to Buy' there's been a further acceleration," Barratt's Chief Executive Mark Clare told Reuters.

Barratt, which also guided its full-year profits towards the top end of analyst estimates, reported a 162 percent rise in pretax profit for the six months to the end of December.

Analysts on average expect Barratt to report full-year pretax profit of 323-380 million pounds, according to Thomson Reuters data.

Shares in Barratt were up 4.7 percent at 430.9 pence, one of the biggest risers in the FTSE 250 index, while Redrow was down 0.2 percent at 321.6 pence at 1040 GMT.

Both companies said they were continuing to see strong demand in the first few weeks of 2014, although labour shortages and planning restrictions were checking growth.

Government data showed last week that construction started on more homes in England last year than at any point since 2007. However, economists say demand far exceeds supply.

Barratt said it had increased output by 19 percent in July-December compared to the same period in 2012.