Over 60% of UK homes could cut hot water bills with an air to water heat pump
Heating domestic hot water accounts for around a fifth of a typical home’s energy use. An air to water heat pump offers a way to slash that cost by using free heat from the outside air. The Energy Saving Trust estimates that over 60% of UK homes could benefit from this technology based on housing stock analysis (Energy Saving Trust, 2026).
An air to water heat pump extracts heat from outside air and transfers it to water stored in a cylinder for taps, showers, and baths. It does not directly heat radiators or underfloor heating unless paired with a separate heating system. This is different from an air-to-air heat pump, which heats air blown into rooms rather than water.
Who qualifies for the £7,500 Boiler Upgrade Scheme grant
The Boiler Upgrade Scheme offers a £7,500 grant towards the installation of an air source heat pump in England and Wales (GOV.UK, 2026). To qualify, you must be a homeowner or small landlord with an existing property that has a valid Energy Performance Certificate (EPC). The EPC must show no outstanding recommendations for loft or cavity wall insulation that remain unfilled.
The grant covers heat pumps that provide both space heating and hot water, or hot water only if the system is linked to a thermal store. You cannot claim the grant for a new-build property or a home that already has a heat pump installed. The property must also have a suitable outdoor space for the outdoor unit.
Quick numbers costs, savings, and running costs
| Item | Typical range | Source |
|---|---|---|
| Installation cost (after £7,500 grant) | £2,500–£6,000 | GOV.UK Boiler Upgrade Scheme, 2026 |
| Annual hot water running cost (gas boiler) | £300–£450 | Energy Saving Trust, 2026 |
| Annual hot water running cost (heat pump) | £120–£200 | Energy Saving Trust, 2026 |
| Annual CO₂ saving (kg) | 1,200–1,800 | DESNZ, 2026 |
| Hot water cylinder size needed | 200–300 litres | MCS installer standards, 2026 |
| COP (Coefficient of Performance) for hot water only | 2.5–3.5 | Heat Pump Association, 2026 |
The direct answer an air to water heat pump heats your hot water cylinder using ambient air, reducing gas use by up to 70%
An air to water heat pump extracts heat from outside air, compresses it to a higher temperature, and transfers that heat to water in a cylinder. This process can reduce gas use for hot water by up to 70% compared to a standard gas boiler (Energy Saving Trust, 2026).
The system typically heats water to 55°C, with some models reaching up to 60°C. It works year-round, even when outside temperatures drop to -15°C. The hot water is stored in a cylinder and used on demand, not produced instantaneously like a combi boiler. This means you need a larger cylinder to meet daily demand.
Eligibility requirements property, EPC, and existing heating system
To qualify for the Boiler Upgrade Scheme grant, your property must have a suitable outdoor space for the outdoor unit, clear of obstructions and near the hot water cylinder (GOV.UK, 2026). Your EPC must be valid (not more than 10 years old) and must not have recommendations for loft or cavity wall insulation that are unfilled.
Your existing heating system must be a gas, oil, LPG, or electric boiler. You cannot have a heat pump already installed. The property must either have a hot water cylinder or be able to install one. Homes with a combi boiler that cannot fit a cylinder are not eligible for the grant.
How to verify a certified installer for your heat pump
The installer must be MCS-certified to qualify for the Boiler Upgrade Scheme grant (MCS, 2026). They must also be registered with TrustMark for consumer protection (TrustMark, 2026). To find a certified installer, search the MCS online register using your postcode, check their MCS certificate number, and verify TrustMark membership.
Ask for references from past customers and confirm the installer will complete the work to MCS standards. The installer must provide the necessary paperwork for the grant application, including a quote and installation details.
What a hot-water-only system means for your home
A hot-water-only air to water heat pump is built to heat a thermal store or hot water cylinder, not radiators or underfloor heating (MCS installer standards, 2026). This system is ideal for homes with an existing wet central heating system that you want to keep separate, such as a gas boiler for radiators and a heat pump for hot water.
You will need a larger hot water cylinder, typically 200–300 litres, to store enough hot water for daily use. The cylinder must be well-insulated to minimise heat loss. The system may also need a backup immersion heater for times of high demand or very low outside temperatures when the heat pump alone cannot meet demand.
The bottom line who gets the grant
The £7,500 Boiler Upgrade Scheme grant is available to homeowners and small landlords in England and Wales who meet the eligibility criteria (GOV.UK, 2026). You qualify if you have a suitable property, a valid EPC with no unfilled insulation recommendations, and are replacing a gas, oil, LPG, or electric boiler.
You do not qualify if you live in a new-build home, your EPC has unfilled insulation recommendations, your home has a combi boiler that cannot fit a cylinder, or your home already uses a heat pump. The grant is per property, not per person, and can only be claimed once.
To take advantage of the grant, check your EPC online, find an MCS-certified installer in your area, and apply through the installer. Boiler Upgrade Scheme application process Heat pump running costs vs gas boiler
Frequently Asked Questions
It extracts heat from outside air and transfers it to water stored in a cylinder for taps, showers, and baths. It does not heat radiators unless paired with a separate system. The Energy Saving Trust confirms this is a dedicated hot water solution.
After the £7,500 Boiler Upgrade Scheme grant, installation costs £2,500 to £6,000 according to GOV.UK. The grant is available for homeowners and small landlords in England and Wales.
You need a 200 to 300 litre hot water cylinder based on MCS installer standards. The exact size depends on your household's hot water demand and number of occupants.
Yes, it can replace a gas boiler for hot water only if linked to a thermal store. The Boiler Upgrade Scheme covers such systems according to GOV.UK. It will not directly heat your radiators or underfloor heating.
The Coefficient of Performance for hot water only is typically 2.5, meaning it produces 2.5 kWh of heat for every 1 kWh of electricity used. This is lower than for space heating due to higher water temperatures needed.
