A fresh wave of regional cities is emerging as the strongest performers for property investors, with new research from West One Loans showing Ipswich, Leicester and Portsmouth delivering the sharpest rental yield growth in recent years.
The lender’s analysis of rental market data and house prices across the UK’s 63 largest towns and cities found that, while London, Birmingham and Manchester remain the most favoured destinations, investors may find better returns in markets with lower entry costs and rising demand.
Glasgow continues to offer the highest average yields overall, but it is Ipswich that has led growth, with yields rising from 4.1% in 2023 to 5.2% in 2025 – an increase of 1.1 percentage points. Leicester has seen a 1.0 percentage point rise to 5.3%, while Portsmouth recorded a 0.9 percentage point increase to 6.3%.
Other centres showing strong momentum include Norwich, Exeter, Reading and Southampton, each posting yield growth of around 0.9 percentage points over the two-year period. West One Loans said the combination of rising rents and relatively affordable property values was driving this trend.
URBAN REGENERATION DRIVING DEMAND
The firm highlighted that ongoing regeneration projects were reshaping many of these regional markets, creating opportunities for both seasoned investors and those entering the market for the first time.
Thomas Cantor, co-head of short-term finance at West One Loans, said: “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.
“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.”
FINANCE TO MATCH MARKET OPPORTUNITIES
West One Loans said development finance and bridging loans would play a key role in helping investors take advantage of these emerging hotspots. The lender argued that flexible, tailored finance solutions allow investors to move quickly in competitive markets and maximise the potential of both regeneration schemes and existing properties.
Cantor 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.
“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 focused on urban regeneration or seeking to tap into existing hotspots.”
