"I think the challenges, for most, centre around the cost and availability of materials at the moment, but we've also seen a hardening across the insurance market."
FR: What made you set up J3 Advisory?
Having spent just over five years working in the latent defects insurance (LDI) space, I became attuned to what property professionals liked and what frustrated them when it came to arranging this type of insurance. That insight was the springboard to start J3, realising that developers, while always keen on getting a sharp price, actually wanted proper advice around LDI. I could also see some of their other frustrations with regards to arranging and structuring their acquisition and construction debt.
FR: When J3 launched you said its aim is to fuse property insurance and structured funding advice. Why is this so important for developers?
In my experience, most SME developers have lean organisational structures, which always results in people having to wear various hats and keep lots of plates spinning. Having an extension to that leadership team with J3 taking care of the funding elements and appropriate LDI cover enables developers, development directors, and managers to focus on more important tasks at hand. Knowing that J3 has their funding and protection covered gives peace of mind and frees up time.
FR: What sets J3 apart from other insurance/finance advisory firms?
Our mission is to fuse the insurance and debt advisory markets and having an adviser with an intimate knowledge, both of these markets and the client’s objectives is a key piece of the development jigsaw.
As an extension to that, I believe having emotional intelligence is an undervalued behaviour. At J3 we take the time to understand our clients’ needs and the challenges they face. This is so important to ensure that the advice we give is tailored to their specific needs and that they get the right solutions for their projects.
FR: Do you see your role, as advisers, as much about education as giving advice, especially when it comes to latent defects insurance?
Definitely. The LDI market has gone through what feels like constant change over the past few years. Making sure our clients are up to speed is a key part of our role. One of the crucial aspects for property professionals is that we're dealing with all of the A-rated providers on a daily basis. Then, if there are any changes, we have pick-up-the-phone-ability with the right insurers.
On the funding side, I'm always surprised how often we sit down with a client and James, my co-founder, talks them through a different funding strategy or way to fund a deal that they haven't seen before. Those abilities and our commitment to maintaining great insurer and lender relationships put our clients in the best possible position.
FR: You also work with a number of housing associations (HA), how different or difficult is this to working with private developers?
Most of our HA relationships have come about where we've worked with a developer/main contractor and the HA is the beneficiary of the LDI policy, so invariably we have discussions with them to ensure they understand the insurance contract and that they feel their interests are taken care of by what's being proposed.
I think the differences aren't that huge from an interaction perspective, it's more like working with the larger developers where things take longer because of the size and scale of the organisation. I wouldn't say that working with HA's is any more challenging than working with any of the developers we work with.
FR: What will be the main challenges for property professionals in 2022 and how will you help your clients to overcome these challenges?
I think the challenges, for most, centre around the cost and availability of materials at the moment, but we've also seen a hardening across the insurance market. In this instance, our role is very much to take the guesswork out of procuring a warranty. We need to answer all of the questions our clients are likely to have: Is this provider credible and well supported from an underwriting capacity? Is the policy I'm being offered suitable for my build? Am I getting the best possible commercial terms? If we can answer yes to all these questions then we know we are doing the right thing for our client.
Funding-wise, the market is so noisy, rates are low and lenders want to get money out the door and into development. The challenge in that market is getting the right money from the right lender and we always think that marriage is as important as the rate our clients receive. Our job is to put good developers together with good lenders.