Professional landlords are increasingly concentrating investment in their home regions as local market knowledge becomes more important to portfolio strategies, according to analysis from Redwood Bank.
The bank’s review of landlord investment patterns between 2021 and 2026 found professional investors have become more likely to buy within their own regions, despite higher interest rates, regulatory changes and shifts in tenant demand.
Redwood said the findings suggested landlords were placing greater emphasis on operational expertise, knowledge of local markets and long-term investment quality rather than simply seeking the highest rental yields.
Tom Worbey, senior product manager at Redwood Bank, said: “The buy-to-let market has changed significantly over the past five years. Professional landlords are operating in a much more complex environment, with higher borrowing costs, greater regulation and increasing expectations around property management.
“In that environment, local knowledge has become a genuine competitive advantage. Experienced landlords understand the markets they operate in, they know what tenants are looking for, they have relationships with local agents and contractors and they’re often better placed to identify opportunities that others might miss.”
EAST MIDLANDS LEADS SHIFT TOWARDS LOCAL INVESTMENT
The largest change was recorded in the East Midlands, where the proportion of investors buying locally increased by 15.1% over the five-year period. The South West recorded a 14.2% increase.
Wales bucked the wider trend, with local investment among Welsh landlords falling by 9.4% as investors expanded their portfolios into the neighbouring South West.
The analysis comes as the private rented sector continues to professionalise, with many investors operating through multiple limited company special purpose vehicles and holding portfolios spanning buy-to-let, houses in multiple occupation, mixed-use and commercial property.
Redwood said more experienced investors appeared to be concentrating their portfolios in areas where they already understood planning and licensing requirements, tenant demand, rental values and local property management networks.
Such knowledge can be particularly important for HMO investors because licensing requirements vary between local authorities.
LANDLORD STRATEGIES BECOME MORE DISCIPLINED
The bank said the trend also reflected a broader change in portfolio strategy. Landlords have historically faced a choice between regions offering stronger rental yields and those expected to provide greater long-term capital growth.
However, rising rents, changing market conditions and infrastructure investment have created opportunities closer to home that Redwood said could offer both yields and prospects for capital appreciation.
Worbey said: “Professional landlords are thinking much more like business owners than they were a decade ago. They’re balancing income, long-term growth, operational efficiency and exit strategy together rather than making decisions based on yield alone. The regions they invest into are a key driver and output of this.
“Importantly, this has implications for lenders. Assessing a landlord today isn’t simply about looking at an individual property and a blanket portfolio check.
“It’s about understanding the borrower’s wider strategy, their experience and why a particular investment makes sense for their business.
“As landlord portfolios become more sophisticated, and more targeted, lending decisions need to reflect that.”
