diff --git a/scripts/lib/devtool/standard.py b/scripts/lib/devtool/standard.py
index e3b74ab8f0..f46ce34ad1 100644
--- a/scripts/lib/devtool/standard.py
+++ b/scripts/lib/devtool/standard.py
@@ -765,6 +765,16 @@ def get_staging_kbranch(srcdir):
         staging_kbranch = "".join(branch.split('\n')[0])
     return staging_kbranch
 
+def get_real_srctree(srctree, s, workdir):
+    # Check that recipe isn't using a shared workdir
+    s = os.path.abspath(s)
+    workdir = os.path.abspath(workdir)
+    if s.startswith(workdir) and s != workdir and os.path.dirname(s) != workdir:
+        # Handle if S is set to a subdirectory of the source
+        srcsubdir = os.path.relpath(s, workdir).split(os.sep, 1)[1]
+        srctree = os.path.join(srctree, srcsubdir)
+    return srctree
+
 def modify(args, config, basepath, workspace):
     """Entry point for the devtool 'modify' subcommand"""
     import bb
@@ -923,14 +933,7 @@ def modify(args, config, basepath, workspace):
 
         # Need to grab this here in case the source is within a subdirectory
         srctreebase = srctree
-
-        # Check that recipe isn't using a shared workdir
-        s = os.path.abspath(rd.getVar('S'))
-        workdir = os.path.abspath(rd.getVar('WORKDIR'))
-        if s.startswith(workdir) and s != workdir and os.path.dirname(s) != workdir:
-            # Handle if S is set to a subdirectory of the source
-            srcsubdir = os.path.relpath(s, workdir).split(os.sep, 1)[1]
-            srctree = os.path.join(srctree, srcsubdir)
+        srctree = get_real_srctree(srctree, rd.getVar('S'), rd.getVar('WORKDIR'))
 
         bb.utils.mkdirhier(os.path.dirname(appendfile))
         with open(appendfile, 'w') as f:
diff --git a/scripts/lib/devtool/upgrade.py b/scripts/lib/devtool/upgrade.py
index 39a1910a49..967d157077 100644
--- a/scripts/lib/devtool/upgrade.py
+++ b/scripts/lib/devtool/upgrade.py
@@ -88,7 +88,7 @@ def _rename_recipe_files(oldrecipe, bpn, oldpv, newpv, path):
     _rename_recipe_dirs(oldpv, newpv, path)
     return _rename_recipe_file(oldrecipe, bpn, oldpv, newpv, path)
 
-def _write_append(rc, srctree, same_dir, no_same_dir, rev, copied, workspace, d):
+def _write_append(rc, srctreebase, srctree, same_dir, no_same_dir, rev, copied, workspace, d):
     """Writes an append file"""
     if not os.path.exists(rc):
         raise DevtoolError("bbappend not created because %s does not exist" % rc)
@@ -104,6 +104,11 @@ def _write_append(rc, srctree, same_dir, no_same_dir, rev, copied, workspace, d)
     af = os.path.join(appendpath, '%s.bbappend' % brf)
     with open(af, 'w') as f:
         f.write('FILESEXTRAPATHS:prepend := "${THISDIR}/${PN}:"\n\n')
+        # Local files can be modified/tracked in separate subdir under srctree
+        # Mostly useful for packages with S != WORKDIR
+        f.write('FILESPATH:prepend := "%s:"\n' %
+                os.path.join(srctreebase, 'oe-local-files'))
+        f.write('# srctreebase: %s\n' % srctreebase)
         f.write('inherit externalsrc\n')
         f.write(('# NOTE: We use pn- overrides here to avoid affecting'
                  'multiple variants in the case where the recipe uses BBCLASSEXTEND\n'))
@@ -524,14 +529,7 @@ def upgrade(args, config, basepath, workspace):
         else:
             srctree = standard.get_default_srctree(config, pn)
 
-        # Check that recipe isn't using a shared workdir
-        s = os.path.abspath(rd.getVar('S'))
-        workdir = os.path.abspath(rd.getVar('WORKDIR'))
-        srctree_s = srctree
-        if s.startswith(workdir) and s != workdir and os.path.dirname(s) != workdir:
-            # Handle if S is set to a subdirectory of the source
-            srcsubdir = os.path.relpath(s, workdir).split(os.sep, 1)[1]
-            srctree_s = os.path.join(srctree, srcsubdir)
+        srctree_s = standard.get_real_srctree(srctree, rd.getVar('S'), rd.getVar('WORKDIR'))
 
         # try to automatically discover latest version and revision if not provided on command line
         if not args.version and not args.srcrev:
@@ -575,7 +573,7 @@ def upgrade(args, config, basepath, workspace):
             _upgrade_error(e, recipedir, srctree, args.keep_failure)
         standard._add_md5(config, pn, os.path.dirname(rf))
 
-        af = _write_append(rf, srctree_s, args.same_dir, args.no_same_dir, rev2,
+        af = _write_append(rf, srctree, srctree_s, args.same_dir, args.no_same_dir, rev2,
                         copied, config.workspace_path, rd)
         standard._add_md5(config, pn, af)