| PROS | CONS |
|---|---|
| THE LEVEL OF RETURNS Provides a hedge against regional differences in house prices and rental growth. When some areas see minimal growth, other areas may be surging ahead. This allows investors to balance portfolio risk across the UK's regional property cycle. | LONG TERM EQUALITY For investors with very long investment horizons, the benefits of diversification may be less significant. The UK property market tends to be cyclical, with trends in the South often playing out in the North a few years later. |
| THE SHAPE OF RETURNS Allows investors to combine higher rental returns, typically found in Northern regions, with the stronger long-term capital growth of Southern regions. | GREATER GEOGRAPHIC KNOWLEDGE NEEDED When purchasing a property, investors need knowledge of multiple markets rather than only their local area, where they may already have evidence of achieved pricing and rental demand. |
| THE SECURITY OF RETURNS Larger and more diverse portfolios reduce the volatility of returns. Moving from a single property to a small portfolio of two to five homes reduces the volatility in annual returns by around 12%. | MANAGEMENT COST Running a range of properties across different locations may be more expensive than having homes in one location, either through the use of agents or higher self management costs. |
| MANAGING REGULATORY RISK Enables investors to tap into different tenant demographics across the country. This can reduce risks stemming from economic shifts or changes to regulation by central government or local authorities. | THE HUMAN TOUCH Owning homes over a larger area tends to mean less direct interaction between landlord and tenant. While this may be a negative for some landlords, it may be a positive for others. |
| STICKING TO A BUDGET Investors don’t have bottomless pockets. Buying in a range of markets means they can tailor each purchase to the budget they have available at that moment in time. |
