Professional landlords are increasingly investing closer to home as local knowledge and operational efficiency take greater weight in portfolio decisions, new analysis suggests.

Redwood Bank’s review of investment patterns between 2021 and 2026 found landlords are becoming more concentrated in their home regions.

The shift comes despite higher borrowing costs, regulatory changes and evolving tenant demand.

The East Midlands recorded the biggest increase, with the proportion of investors buying locally rising by 15.1% over the five-year period.

The South West followed closely, recording a 14.2% increase in local investment.

Wales bucked the wider trend. Local investment among Welsh landlords fell 9.4%, with more investors looking across the border to the South West.

Local knowledge gains importance

Redwood said the findings point to a change in how professional landlords approach portfolio growth.

Rather than simply chasing the highest rental yields around the country, more investors appear to favour markets they already understand.

That can give landlords greater knowledge of local rents and tenant demand. They may also have established relationships with letting agents, tradespeople and other property professionals.

Local expertise can prove particularly important for HMO investors, given differences in licensing requirements between councils.

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.”

Landlords take more targeted approach

The findings come as professional landlords increasingly structure their portfolios across limited companies and different property types.

These can include conventional buy-to-let properties, HMOs, mixed-use schemes and commercial assets.

Redwood said landlords are also looking beyond headline yields when deciding where to invest. Rental income, potential capital growth, running costs and exit strategies are all playing a role.

Worbey added: “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.

“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.”

Redwood said the growing focus on particular regions means lenders may also need to take a more detailed view of landlords’ wider portfolio strategies.