"It’s fair to say that Birmingham and Manchester are no longer second cities and are now on a similar footing to London when it comes to investment, regeneration, and popularity, not just for residents, but also for property investors"
- Thomas Cantor - West One Loans
New research from West One Loans has found that while investors often favour London, Birmingham, and Manchester, a fresh group of ‘second cities’ is now recording the strongest growth in rental yields.
These locations are offering investors the chance to achieve strong returns, supported by rising rental values and lower entry costs compared with the traditional hubs.
West One Loans analysed rental market data and house prices across 63 of the UK’s largest cities and towns. It then calculated estimated yields for 2025 and compared them with 2023 figures to determine where growth has been most pronounced.
The study shows that Glasgow continues to deliver the highest average yields, but Ipswich, Leicester, and Portsmouth have experienced the fastest growth over the last two years. Ipswich recorded the biggest increase, with yields rising from 4.1% in 2023 to 5.2% in 2025, an improvement of 1.1 percentage points.
Leicester followed with a growth of 1.0 percentage points to reach 5.3%. Portsmouth also saw a rise of 0.9 percentage points, bringing average yields to 6.3%.
Other cities with notable yield increases include Norwich, Exeter, Reading, and Southampton, each recording growth of around 0.9 percentage points. These trends reflect a balance of rent rises and more affordable property prices, offering investors the potential for stronger returns than in higher-cost markets.
The findings underline the emergence of a new tier of second cities, where regeneration and housing demand are creating opportunities for investment. For many developers and landlords, these markets provide an alternative to the higher entry costs of traditional major cities.
“It’s fair to say that Birmingham and Manchester are no longer second cities and are now on a similar footing to London when it comes to investment, regeneration, and popularity, not just for residents, but also for property investors,” said Thomas Cantor, co-head of short-term finance at West One Loans. “However, high demand and rising property prices mean initial investment costs are significant. This has created an opportunity for a new wave of second cities, where investors can access more favourable deals and benefit from strong yield growth, particularly when using specialist finance solutions to support urban regeneration and property investment projects.
“Whether you’re an experienced investor or it’s your first time entering into the space, development finance is a key tool in your arsenal when it comes to moving with the speed and agility required to maximise on current market opportunities.
“At West One Loans, we’re extremely well-positioned to offer flexible, tailored finance options that can help you capitalise on the fast-evolving UK property market, whether they’re focused on urban regeneration or seeking to tap into existing hotspots.”
