diff --git a/bitbake/lib/toaster/bldcontrol/localhostbecontroller.py b/bitbake/lib/toaster/bldcontrol/localhostbecontroller.py
index 6bdd743b8b..5df22909d0 100644
--- a/bitbake/lib/toaster/bldcontrol/localhostbecontroller.py
+++ b/bitbake/lib/toaster/bldcontrol/localhostbecontroller.py
@@ -222,9 +222,21 @@ class LocalhostBEController(BuildEnvironmentController):
         self.setCloneStatus(bitbake,'complete',clone_total,clone_count,'')
         logger.debug("localhostbecontroller: current layer list %s " % pformat(layerlist))
 
-        if self.pokydirname is None and os.path.exists(os.path.join(self.be.sourcedir, "oe-init-build-env")):
-            logger.debug("localhostbecontroller: selected poky dir name %s" % self.be.sourcedir)
-            self.pokydirname = self.be.sourcedir
+        # Resolve self.pokydirname if not resolved yet, consider the scenario
+        # where all layers are local, that's the else clause
+        if self.pokydirname is None:
+            if os.path.exists(os.path.join(self.be.sourcedir, "oe-init-build-env")):
+                logger.debug("localhostbecontroller: selected poky dir name %s" % self.be.sourcedir)
+                self.pokydirname = self.be.sourcedir
+            else:
+                # Alternatively, scan local layers for relative "oe-init-build-env" location
+                for layer in layers:
+                    if os.path.exists(os.path.join(layer.layer_version.layer.local_source_dir,"..","oe-init-build-env")):
+                        logger.debug("localhostbecontroller, setting pokydirname to %s" % (layer.layer_version.layer.local_source_dir))
+                        self.pokydirname = os.path.join(layer.layer_version.layer.local_source_dir,"..")
+                        break
+                else:
+                    logger.error("pokydirname is not set, you will run into trouble!")
 
         # 5. create custom layer and add custom recipes to it
         for target in targets: