The headline

UK rental growth forecasts for 2026-2028 are in, and the pattern is unambiguous: regional cities continue to outperform London by a wide margin, with Manchester, Liverpool and Birmingham taking the top three spots for cumulative growth.

According to Savills 2026 outlook, UK-wide rental growth is forecast at 17.6% over the five-year period to 2028. But the spread between fastest and slowest markets is the widest it has been in a decade.

Where the growth is

Here is our read on the 2026-2028 rental growth forecast by city:

  • Manchester: +21.7% — strongest regional forecast
  • Leeds: +19.0% — legal sector + undersupply driving consistent growth
  • Liverpool: +19.3% — Wirral Waters regen is the bet
  • Birmingham: +18.4% — HS2 effect pulling corporate rentals
  • Sheffield: +17.2% — best yield value for cash-flow investors
  • Newcastle: +17.9% — Civil Service relocation catalyst
  • Nottingham: +16.4% — student capital, PBSA dominance
  • London: +15.1% — from a high base, pulling UK average up

What is driving this

Three factors are converging:

1. Supply shortfall in regional cities. Manchester is delivering ~2,700 units a year against household-formation demand of 4,000+. Liverpool is delivering 1,200 against 4,200 demand. The shortfall is structural — planning pipeline cannot close the gap in the 2026-2028 window.

2. Tenant demand is sticky and growing. Cities with top-5 UK universities (Manchester, Leeds, Liverpool, Birmingham, Nottingham, Sheffield) benefit from graduate retention rates of 45-60%. Every year, more professionals stay in the cities where they studied.

3. London pricing is capped. London rents grew 15%+ in 2022-2023 from a low base. Further growth is constrained by affordability ceilings — median London rent is now 39% of median household income. Regional cities sit at 22-28%.

What this means for investors

If your priority is rental growth, overweight Manchester, Leeds and Liverpool. If your priority is yield on day one, Sheffield and Newcastle offer the best starting positions. If your priority is capital growth with lower yield, Birmingham and London are the trades — different cycle stages but both with long runway.

We continue to avoid: single-city concentration above 40% of portfolio, pre-2000 leasehold flats with unknown service-charge trajectory, and schemes outside the top-8 cities where rental comparables are thin.

The risks

Three things we are watching:

  1. Policy risk. The Renters Reform Bill, Minimum Energy Efficiency Standards tightening to EPC C, and potential further tax changes could affect net yields.
  2. Interest-rate path. If base rates stay above 4% through 2027, BTL refinance at higher LTV will be tight.
  3. Delivery risk. Major off-plan schemes are running 6-12 months late. Always model a 9-month delay into off-plan acquisitions.

The bottom line

Regional UK property continues to offer one of the best income+growth risk/reward profiles in developed markets. The dispersion between top and bottom cities is growing — stock selection matters more than ever.