The average UK household spends £1,800 a year on energy – but a quarter of a million homes could soon be £620 better off. That is the headline figure from a new government-backed scheme reported by Chronicle Live, which aims to cut bills for the least efficient properties.
As Chronicle Live reports, the programme targets homes with Energy Performance Certificate (EPC) ratings of D through G – the draughtiest, most expensive properties to heat. For a typical 3-bed semi, £620 represents roughly a third of the annual heating bill.
Who qualifies – and who doesn’t
Eligibility hinges on three factors: income, property type, and current EPC rating. Households on Universal Credit, Pension Credit, or Child Tax Credit are likely to qualify. The scheme also prioritises off-gas-grid homes, which often rely on expensive oil or LPG heating. Owner-occupiers and private renters are included, but landlords must contribute at least a third of the cost. Homes rated A-C are excluded – they already meet modern efficiency standards.
The Department for Energy Security and Net Zero confirmed the scheme will open for applications by late 2025, though exact dates remain unannounced. Officials told the BBC the programme will run until 2028, with a total budget of £1.8 billion.
What it costs a typical 3-bed semi
The savings depend on the upgrade. A detached home with cavity wall insulation and a modern gas boiler could see bills drop by £300-£400 a year. Add loft insulation top-up and draught-proofing, and the figure rises to £500. Full electrification – a heat pump plus solar panels – could push annual savings past £620, according to Energy Saving Trust estimates.
But the catch is upfront cost. A heat pump installation runs £7,000-£13,000 after the Boiler Upgrade Scheme grant. Solar panels cost £5,000-£8,000. The new programme covers 100% of insulation costs for low-income households, but heat pumps and solar require a co-payment. For a family in a 3-bed semi earning £25,000 a year, the heat pump co-pay could still be £2,000 – a significant sum.
EPC impact and resale value
Raising a home from EPC band E to C adds an estimated £15,000 to the property’s value, according to Nationwide. The scheme’s upgrades – insulation, heating controls, double glazing – directly improve the rating. A home moving from D to B could see its energy costs halve. That makes it far more attractive to buyers and mortgage lenders. From 2028, landlords must meet a minimum EPC C for new tenancies; this scheme helps them comply without shouldering the full cost.
Households on standard variable tariffs can check eligibility through gov.uk from late 2025. The application process is expected to be online, with local authorities managing installations. Given the 250,000 cap, early application is critical – the first wave of funding will likely be snapped up within weeks.
Frequently Asked Questions
Check your EPC rating – homes rated D to G are eligible. Then confirm your income via benefits such as Universal Credit or Pension Credit. The scheme prioritises off-gas-grid homes. Full details will be on gov.uk when applications open in late 2025.
Yes. The new programme covers insulation and heating controls, while the Boiler Upgrade Scheme provides £7,500 toward a heat pump. Combining both could reduce your upfront heat pump cost by over half. Check eligibility for both on the Energy Saving Trust website.
