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The UKs emerging ‘second cities’ may outperform major hubs in rental yields.
Investors may continue to favour the nation’s key cities such as London, Birmingham and Manchester. But a new wave of “second cities” is delivering the strongest growth in rental yields, according to new research by West One Loans.
These emerging markets are offering investors the chance to achieve attractive returns, driven by rising rents and comparatively lower entry costs compared with the traditional major hubs.
West One Loans analysed both rental market data and house prices across the UK’s 63 largest cities and towns, combining these to calculate estimated yields for 2025 and comparing them with figures from 2023 to identify where growth has been strongest.
The research shows that, although Glasgow currently offers the highest average yields for investors, it is Ipswich, Leicester and Portsmouth that have seen the fastest growth in yields over the past two years.
Ipswich leads this growth with an estimated yield increase of 1.1 per cent, rising from 4.1 per cent in 2023 to 5.2 per cent in 2025.
Leicester follows closely with a 1.0 per cent rise to 5.3 per cent, while Portsmouth has seen its yield climb by 0.9 per cent to 6.3 per cent.
Other notable cities showing strong growth include Norwich, Exeter, Reading and Southampton, all registering increases of around 0.9 percentage points over the same period, reflecting a combination of rising rents and manageable property price growth.
This highlights the rise of a new wave of cities where rental prices are increasing and property values remain comparatively affordable, giving investors the potential for strong returns without the higher entry costs of the major hubs.
As urban regeneration projects continue to reshape many of these cities, the opportunity for development finance in these emerging markets is significant. Whether for first-time investors or seasoned developers, West One Loans offers tailored finance solutions, including development exit finance and bridging loans, to support investors looking to capitalise on these high-growth opportunities.
“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,” says 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 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.”
Average house price data sourced from Gov – UK HPI (House Price Index) (2025).Average rental data sourced from ONS (Office for National Statistics) (2025).Average yield and change calculated by West One Loans using the average house price and rent in each area.62 major UK towns and cities sourced from Centre for Cities (2025).View full data tables and sources online here.
www.westoneloans.co.uk/blog/new-wave-of-second-cities-offers-strongest-yield-growth
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