Yes, it is. So, how stable is the funding for these housing associations? How stable are these grants?

They're very stable and have been around for decades. Various governments support affordable housing to different extents. For instance, what we refer to as a Labour government here tends to support affordable housing more and probably provides more grants. However, we've been under a Conservative government for the last 13 years, and they've still invested billions of pounds in the affordable housing sector through grants. This funding is distributed via a government body called Homes England. Housing associations have to bid to Homes England once every five years to receive a grant. In return, they promise to deliver a certain amount of affordable housing.

Has it happened in the past?

The key point here dates back to 1988 when the Conservative government introduced a housing bill. This bill still offered grants, but it also allowed housing associations to secure private finance. This meant that housing associations no longer received 100% grant for the entire building. Instead, they were granted a portion of it and were allowed to take out a loan against the property to finance the rest. This significant change has shaped the last 30 to 40 years. The government would provide some grant, but housing associations could also take out loans. Over the years, each successive government has sought value for money, trying to keep grant rates as low as possible. They set a budget every five years, and it's up to the housing associations to bid for that funding. This introduced an element of competition among housing associations to see who would accept the lowest grant rate per unit and who could deliver the most.

Could there be a situation where the value of the land plummets and they're unable to make their payments on their bonds, especially if they buy the land and a company like Countryside doesn't?

While it's not impossible, the typical partnership model involves a developer or a partnership business presenting a site to a housing association. They then agree on a value for the land, which must be externally audited by a registered valuer, or RICS, as we call it here. This valuation is based on the current market. Most partnership businesses aim to be on-site within six months, transferring the land to the housing association and conducting monthly evaluations. I've never seen a significant market downturn occur between these two stages. However, in extreme circumstances like Covid, both the developer and the housing association can pull out of the deal until the last moment.