Landlords shun higher yields to keep portfolios closer to home

Professional landlords are increasingly choosing to invest in markets they know best rather than spreading their portfolios across Britain, research has revealed.

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

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

Local knowledge has become a genuine competitive advantage.”

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

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, Redwood Bank said.

Staying local

Tom Worbey (pictured), senior product manager at Redwood Bank, says: “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.”

Shift in investor strategies

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

Worbey adds: “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.”