Housebuilder builds up stake in AIM-listed property firm following purchase of NorthCountry Homes in August.
Housebuilder Country & Metropolitan aims to acquire property minnow Headway next year as part of an expansion drive.

Country & Metropolitan noted in its annual report that it had raised its holding in the company, which is listed on the alternative investment market, to 9.98%. It described the stake as a trade investment.

Headway's key landholdings are five brownfield sites in the north of England and the Cotswolds, which the housebuilder is thought to consider ripe for development.

A source close to Country & Metropolitan said: "Headway is undervalued in the opinion of Country & Metropolitan. The stake is the first stage in having a look at Headway. Country & Metropolitan will maybe talk to the Headway management about a possible takeover after the new year."

A senior City analyst added: "Country & Metropolitan is sneaking up on Headway. Headway has five sites now used for short-term letting that the company probably sees as development opportunities."

Headway is a £2m-turnover firm and would be the second acquisition Country & Metropolitan had made in recent months. It paid £10.2m in cash and 225,000 shares in August for NorthCountry Homes, a specialist in low-cost housing.

Country & Metropolitan is known to have ambitious growth plans and launched a bid for Tay Homes last year, a company twice its size. The takeover bid collapsed when Country & Metropolitan failed to meet Tay Homes' asking price.

The NorthCountry acquisition contributed to an impressive set of results. For the 12 months to 31 August, Country & Metropolitan turned in a pre-tax profit £3.99m, a rise of 81% on the £2.21m profit it made over the same period last year. Turnover surged by 67% to £32.3m.

Group chairman David Laing criticised the government over planning regulations in the firm's annual report. He said: "Politicians have now created a planning system that is so complex, too few homes are being built. I cannot think of any other business sector that suffers so much from government regulation and interference."