Landlords look closer to home as regional investment rises

Professional landlords are increasingly choosing to invest in markets they know best rather than spreading their portfolios across the UK, according to new analysis by Redwood Bank.

The Bank’s review of landlord investment patterns between 2021 and 2026 found that professional investors are becoming more concentrated within their home regions, despite a higher interest rates environment, regulatory reform and changing tenant demand.

The findings suggest that today’s landlords are becoming increasingly focused on operational expertise, local market knowledge and long-term investment quality rather than simply pursuing the highest headline 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.”

One of the biggest changes has come in the East Midlands, which saw an increase of 15.1 per cent of investors buying in their local area, closely followed by the South West that saw a 14.2 per cent uplift over the past five years.

Welsh landlords are bucking the trend with a 9.4 per cent drop in local investment as they extend their portfolio into the neighbouring South West.

The analysis comes at a time when the private rented sector continues to professionalise. Many investors now operate through multiple limited company special purpose vehicles and hold increasingly diverse portfolios spanning buy-to-let, HMOs, mixed-use and commercial property.

As landlord businesses become more sophisticated, investment decisions are also becoming more disciplined.

Rather than seeking geographic diversification for its own sake, many experienced investors appear to be concentrating their portfolios in locations where they have an established knowledge of local planning and licensing requirements, tenant demand, rental values and property management networks. This is especially important for HMO investors, given licensing nuances across different local authorities.

Redwood believes the trend also reflects a broader shift in investor’s portfolio strategies.

Historically, landlords often had to choose between regions offering stronger rental yields and those delivering long-term capital growth. However, rising rents, changing market dynamics and wider infrastructure investment have increasingly created locations closer to home capable of delivering robust yields and strong future capital appreciation simultaneously. This creates significant appeal for portfolio investors looking for a sustainable strategy.

Tom 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.”