Bank buys stake in house builder

The bank said the Highland housing market was strong

A bank has acquired a stake in Scottish house building group Tulloch amid its expectations the housing market will outperform the UK national average.

Bank of Scotland Corporate's Joint Ventures business now owns 40% of Inverness-based Tulloch Homes Group, following a deal worth £27.5m.

The acquisition comes at a time of nationwide uncertainty in the housing market.

However, the bank said in Scotland it was still considered to be strong.

Following the transaction, chairman and chief executive David Sutherland will remain Tulloch's largest shareholder, with a 43% shareholding.

He was delighted the group's bankers of 20 years had decided to invest in the company.

The deal also fits perfectly with our ambition to invest in the north of Scotland housing market, which we see as having strong growth potential over the coming years Gordon More Bank of Scotland Corporate

Mr Sutherland added: "We have built Tulloch from small beginnings in the north of Scotland to the size it is today.

"I look forward to working closely with Bank of Scotland over the coming years as we continue to build our housing across the north of Scotland, Aberdeenshire, the central belt and the islands."

The Bank of Scotland said the Scottish housing market outlook was still considered to be strong, having outperformed the UK market over the past four years and with Halifax forecasting 2008 House Price Inflation at 4%.

Gordon More, head of joint ventures transactions at Bank of Scotland Corporate, said the organisation was looking forward to working with Mr Sutherland and his team.

He said: "The deal also fits perfectly with our ambition to invest in the north of Scotland housing market, which we see as having strong growth potential over the coming years."

Established in 1925, Tulloch operates three principal brands through its house building division - Tulloch Homes, Tulloch Homes Express and Argyll Homes.