Landlords increasingly focus on local buy-to-let investments

Landlords increasingly focus on local buy-to-let investments

Professional landlords are concentrating their buy-to-let portfolios within their home regions, prioritising local market knowledge and operational expertise over geographic diversification, according to Redwood Bank’s recent review.

Redwood Bank’s analysis of landlord investment patterns from 2021 to 2026 shows a clear shift towards local investment despite rising interest rates, regulatory changes and evolving tenant demands. This trend reflects a more disciplined and sophisticated approach by landlords who value familiarity with local planning, licensing, tenant preferences and property management networks.

Tom Worbey, Redwood’s senior product manager, highlighted that the buy-to-let market has become more complex with higher borrowing costs and increased regulation, making local knowledge a competitive advantage. Landlords with established local connections and understanding are better positioned to identify opportunities and manage properties effectively.

Survey findings reveal regional shifts in landlord behaviour

The East Midlands experienced the most significant rise in local investment, with a 15.1% increase in landlords buying within their home area over the last five years. The South West also saw a notable 14.2% uplift. Conversely, Welsh landlords bucked the trend, reducing local investment by 9.4% as they expanded into neighbouring regions like the South West.

This regional focus is particularly relevant for investors in Houses in Multiple Occupation (HMOs), where local licensing requirements vary considerably. Landlords familiar with these nuances can better navigate compliance and operational challenges.

Redwood Bank notes that the private rented sector is becoming increasingly professional, with many landlords operating through multiple limited companies and diversifying into mixed-use and commercial properties. This professionalisation is driving more strategic investment decisions based on detailed local knowledge rather than broad geographic spread.

Context of evolving buy-to-let market dynamics

Historically, landlords often faced a trade-off between regions offering higher rental yields and those promising long-term capital growth. However, recent market developments, including rising rents and infrastructure investments, have created opportunities closer to home that combine both attractive yields and capital appreciation.

These changes coincide with a period of significant regulatory reform affecting the private rented sector, including increased safety obligations, landlord licensing, and tenancy law updates. The complexity of these reforms further incentivises landlords to focus on areas where they have established operational expertise and local support networks.

Higher borrowing costs have also made landlords more cautious, encouraging them to optimise existing portfolios rather than pursue riskier, geographically dispersed investments. Local investment reduces management complexity and may improve tenant retention through better responsiveness and understanding of local demand.

Practical implications for landlords and letting agents

For landlords with small to medium portfolios, the trend towards local investment suggests benefits in deepening knowledge of their immediate markets. This includes understanding local tenant needs, rent levels, and compliance requirements such as licensing and safety standards. Building strong relationships with local letting agents, contractors and councils can enhance operational efficiency and reduce risks.

Letting agents may see increased demand for their services from landlords seeking local expertise and support. Agents can differentiate themselves by offering detailed local market insights, compliance assistance, and tailored property management solutions that reflect evolving landlord priorities.

Landlords should also consider the implications of the Renters’ Rights Act and other regulatory changes that continue to shape landlord-tenant relationships. Familiarity with local enforcement practices and tenant expectations can aid in maintaining compliant and sustainable tenancies.

Areas of uncertainty and what landlords should watch

While the trend towards local investment is clear, the impact of future regulatory developments remains uncertain. Potential changes to landlord licensing schemes, safety regulations and tenancy laws could alter the attractiveness of certain regions or property types. Landlords should monitor government consultations and local authority policies closely.

Economic factors such as interest rate fluctuations and housing market conditions will also influence investment strategies. The balance between rental yield and capital growth may shift again, affecting whether local markets continue to offer the best opportunities.

Additionally, the long-term effects of the Renters’ Rights Act on tenant behaviour and landlord decision-making are still emerging. Landlords should keep abreast of case law and guidance to adapt their letting practices accordingly.

What landlords should consider now

• Review your current portfolio to assess the benefits of concentrating investments locally versus geographic diversification.
• Enhance your knowledge of local planning, licensing and safety regulations to ensure compliance and reduce risks.
• Strengthen relationships with local letting agents, contractors and councils to improve operational efficiency.
• Stay informed about regulatory changes, particularly those affecting tenancy law and landlord obligations.
• Evaluate tenant demand and rental values in your local area to optimise rent setting and property improvements.

Supporting landlords with local investment strategies

Membership of The Landlord Association offers access to practical compliance resources and up-to-date information on regulatory developments that affect local investment decisions. TLA’s BETA testing platform, ORBIT, is being developed to help landlords organise property records, manage documentation and record key actions such as inspections and repairs. These tools can support landlords focusing on local markets by streamlining property management and compliance tasks.

ORBIT’s integration of TLA compliance resources and its property management AI assistant can assist landlords in keeping track of licensing requirements and safety obligations specific to their regions. Accessing TLA member support enables landlords and letting agents to stay informed and prepared for ongoing changes in the private rented sector.

Explore TLA membership and learn more about ORBIT BETA access to enhance your local investment approach and compliance management.

Looking ahead, landlords concentrating on local markets will need to remain agile as regulatory and economic conditions evolve. Keeping a close eye on local authority policies and tenant expectations will be essential to maintaining successful and compliant buy-to-let portfolios.

Sources: Landlord Today