Diversification isn’t just about the numbers

In buy-to-let, the word ‘diversification’ gets thrown around a lot – but most people interpret it to mean ‘owning a lot of properties’. At Fleet Mortgages, we’ve worked with investors who hold fifteen properties, and yet they’re arguably less diversified – and more exposed – than others who hold just three.

That might sound counterintuitive, but if all of those properties are targeting the same tenant demographic, in the same part of town, then the investor is effectively making the same bet again and again.

It’s like saying you’ve got a diversified portfolio because you own shares in five highly-specific tech companies. You’re still reliant on a single market narrative playing out.

True diversification in property comes down to three things: property type, location, and time. Get these right – in combination – and investors are much better placed to ride out the inevitable swings of the market.

Let’s start with property type. Different kinds of homes attract different tenants and behave very differently depending on market conditions. Flats in city centres, terraced homes in commuter belts, three-bed semis in the suburbs – all these cater to different life stages, needs and pressures.

We’ve seen huge divergences in performance post-pandemic: for example, the exodus to more space boosted family homes while the return to offices renewed appetite for central flats. An investor who holds both is naturally more resilient. One dips, the other rises. It doesn’t take clever forecasting – it’s just smart structuring.

Then there’s location. We tend to talk about ‘the housing market’ like it’s one thing, but anyone who’s spent five minutes working in this industry knows how localised things are.

There are times when Manchester is surging, while Birmingham pauses. Regeneration in Liverpool, HS2 offshoots in Leeds, commuter uplift in East Anglia – these aren’t just headline trends, they’re practical signals that opportunities and risks vary enormously by postcode. Helping spread your client’s portfolio across different regions doesn’t just protect against downturns – it also helps them capture upsides when other areas stall.

But perhaps the most overlooked aspect of diversification is time. Most property investors aren’t buying ten properties in one go, they’re building steadily, one acquisition at a time, based on when they’ve saved a deposit or spotted the right opportunity. What they might not realise is that this patience is an advantage. By buying at different points in the cycle, they’re naturally averaging out their exposure.

One property might have been bought in a seller’s market at a premium; another might have been snapped up in a downturn at a discount. It smooths out peaks and troughs and takes a lot of the emotion – and guesswork – out of the equation. If you buy consistently, you benefit from a broader exposure to the full cycle, and over time, the returns tend to level up.

That’s why I always say the market rewards methodical investors – the ones who take their time, do their homework, and build their portfolio thoughtfully across different places, property types, and periods.

Right now, we’re seeing more landlords think strategically about yield and tenant demand, especially as the regulatory landscape tightens. The upcoming Renters’ Rights Bill, for instance, introduces limits on rent increases and tighter eviction rules. Investors who are overextended in one high-cost area, banking on aggressive rent rises to deliver returns, may now find themselves squeezed.

Conversely, landlords who diversified into HMOs or multi-unit blocks – and who understand the rules around licensing and Article 4 directions – may find themselves with a stronger yield cushion.

That’s one reason why we’re seeing rising interest in this segment of the market. And, in recognition of the complexity involved, we’ve recently put out a comprehensive HMO guide to help advisers and clients navigate the planning and compliance landscape more confidently.

At the same time, we’ve continued to adjust our product range to reflect where demand is heading. For example, recent cashback offers on our HMO and MUFB products are designed to support landlords with upfront costs, which are typically higher for these types of properties. Those details matter, especially when margins are tight and borrowers are under pressure to make deals stack.

But all of this circles back to the original point: success in property isn’t about the number of properties. It’s about building a portfolio that’s resilient, responsive, and aligned with market realities – not just market hype.

As advisers, this is the kind of conversation you should be having with your landlord clients. It’s not just about sourcing the next mortgage; it’s about supporting a long-term strategy that works – whatever the market throws their way.