Bovis Homes and Redrow have reduced their workforces by 40%.

Bovis Homes and Redrow have joined the raft of UK housebuilders who have reduced their workforces in order to cope with the tightening economy.

Both companies have cut 40% of their staff due to the market problems caused by the credit crunch and the drop in the number of mortgages. They have also announced cuts in dividend payments and potential adjustments to the values of their land banks.

They join Persimmon, Taylor Wimpey and Barratt Developments, who have all announced job cuts and warned on the outlook for the housing market for 2008.

As part of its cost-saving drive, Bovis said it was closing one of its offices and merging a number of key functions of its northern region with its central region. It also said it would slash its interim dividend by 75%, declaring a payout of 5p against the 20p it had hoped to pay.

The group – which has been in business since 1885 – said it would reduce its headcount by 40%, which means about 360 jobs out of 900 would be cut.

Redrow is also making moves to manage its cost base; closing two of its 10 offices and also making a 40% reduction to the 1,350 people employed by the group, leaving headcount at about 850.  It is carrying out a review of the value of inventory and land not in development, and is also reviewing its dividend, which increased in the year to June 2007 by 20%.

Redrow said in a trading statement: “The UK housing market continues to be severely affected by the credit squeeze. Homebuyer confidence is now also being influenced by concerns about the future for house prices and interest rates. As a result the market for both new and secondhand homes has declined rapidly to transaction levels not experienced for very many years with the price of homes now declining.”

The company continued: “It remains difficult to assess how long the sharp reduction in sales activity will continue or the extent to which underlying house prices will be affected. However, we expect that the difficult markets we are confronting may persist for some time.”