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http://www.cracroftspeerage.co.uk/index12.htm

The territorial basis is still essential in the wording of the Letters Patent creating a peerage, although for a very long time past the reason underlying it has disappeared, and many peerages have been conferred on men who have had no landed possessions at all. In such cases there is invariably some personal associations with the place chosen - that a man was born there or his family had associations with the district, that he himself was living there, or that the place was associated in some way with the new peer's public service. Thus when Sir Rufus Isaacs, later the Marquess of Reading, was raised to the peerage he chose the title of Lord Reading because he had represented that borough in the House of Commons for a number of years. But even when, as in this case, a new peer has chosen a territorial name for his style, the territorial basis is still essential, and Lord Reading's patent would record his peerage as "BARON READING, of Reading in the County of Berkshire". Even foreign place names are chosen in, for instance, cases where soldiers and sailors who have been ennobled have rendered distinguished service abroad, though it is usual to associate with the title home place names also. Thus Lord Nelson's first peerage was "BARON NELSON, of the Nile and of Burnham Thorpe in the County of Norfolk", and when, after his death, his honours went to his brother and an earldom was added, the earldom was "of Trafalgar and of Merton in the County of Surrey". The Duke of Wellington was "VISCOUNT WELLINGTON, of Talavero and Wellington in the County of Somerset". In modern times Sir David Beatty was created "BARON BEATTY, of the North Sea and of Brooksby in the County of Leicester", and Field-Marshal Byng was raised to the peerage as "BARON BYNG OF VIMY, of Thorpe-le-Soken in the County of Essex".