These locations are offering investors the chance to achieve strong returns, supported by growing rental values and lower entry costs compared with the traditional hubs

New research from West One Loans has found that while investors often favour London, Birmingham, and Manchester, a new 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 growing 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 rise, 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%.

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.

He added: 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.