Ofgem will raise the Boiler Upgrade Scheme grant to £9,000 for households replacing oil or LPG heating systems from 23 October 2024. That is nearly double the previous £5,000, and enough to cover the full cost of a typical heat pump installation for many rural homes.
The change was confirmed by the Department for Energy Security and Net Zero last week, as reported by Installer Online. The grant applies to air-source and ground-source heat pumps installed in homes currently using oil, LPG, or other off-grid fossil fuels. Households on mains gas remain eligible for the standard £7,500 grant.
Who qualifies, and who doesn’t
The £9,000 grant is available to owner-occupiers and private landlords in England and Wales. The property must have an existing oil or LPG boiler, and the heat pump must be installed by an MCS-certified installer. Homes with electric storage heaters or direct electric heating are not eligible for the higher rate, they still get £7,500.
Scotland operates its own Home Energy Scotland scheme, which offers up to £9,000 for heat pumps regardless of the current heating type, plus an additional £7,500 for households on certain benefits. Northern Ireland has a separate system under the Northern Ireland Heat Pump Grant, currently set at £7,500.
The catch is timing. Applications for the £9,000 rate open on 23 October 2024, but the scheme is capped. Ofgem allocated £150 million for the 2024–25 financial year, with grants awarded on a first-come, first-served basis. The previous £5,000 grant was fully subscribed within months in some regions.
What it costs a typical off-grid home
A typical 3-bed semi off the gas grid uses about 18,000 kWh of oil or LPG per year. Replacing an oil boiler with an air-source heat pump costs between £7,000 and £13,000 installed, according to the Energy Saving Trust. The £9,000 grant therefore covers the majority, and in many cases the entirety, of the upfront cost.
Running costs also shift. Oil prices have averaged around 6p per kWh over the past year, while electricity is capped at 24.5p per kWh under the October price cap. A heat pump with a Seasonal Coefficient of Performance of 3.5 delivers heat at roughly 7p per kWh, comparable to oil but with lower carbon emissions. For LPG users, where fuel costs can reach 10p per kWh, the heat pump is cheaper to run from day one.
EPC impact is significant too. Replacing an oil boiler with a heat pump typically lifts a property from EPC band D or E to band C or B, depending on the level of insulation. That can increase the property’s value by 5–10% according to estate agent research, and makes it easier to sell to buyers with green mortgages.
Why the government raised the grant
The decision follows persistent criticism that the old £5,000 grant was too low for off-grid homes. Oil and LPG boilers are more expensive to replace than gas boilers, a new oil boiler costs £3,000–£5,000, while a heat pump is often double that. The £4,000 gap was a disincentive.
But the government also has a target to install 600,000 heat pumps per year by 2028. Current installations run at about 50,000 annually, far short of the goal. Raising the grant for the hardest-to-decarbonise homes, those off the gas grid, is a direct attempt to close that gap. The Climate Change Committee estimates that 1.5 million homes use oil or LPG heating. That makes them a priority for the electrification push.
Yet the scheme still excludes the 23 million homes on mains gas, where heat pump adoption remains stubbornly low. The £7,500 grant for gas homes is the same as it was in 2022, and installation costs have not fallen. A heat pump for a gas-heated semi typically costs £9,000–£15,000, leaving a £1,500–£7,500 gap. That gap is the next political pressure point.
What homeowners should do now
Households on oil or LPG should check eligibility and find an MCS-certified installer before 23 October. The grant is processed by the installer, who deducts it from the final invoice. Homeowners do not need to claim the money themselves, but they must ensure the installer is registered with the scheme.
For those on mains gas, the £7,500 grant remains available, but the window for the best value may be closing. Heat pump prices are expected to fall as the market scales up, but no one should wait indefinitely. The Energy Saving Trust recommends getting at least three quotes and checking that the property has adequate insulation, loft insulation to 270mm and cavity wall insulation if possible, before proceeding.
The £9,000 grant is a genuine step forward for rural homes. But the bigger story is that the government is now paying almost the full cost of a heat pump for off-grid households. If you are on oil or LPG, the question is no longer whether you can afford a heat pump, it is whether you can afford not to.
Frequently Asked Questions
From 23 October 2024, the Boiler Upgrade Scheme grant rises to £9,000 for households in England and Wales replacing oil or LPG heating systems with a heat pump. This is nearly double the previous £5,000 and typically covers the full cost of installation, which ranges from £7,000 to £13,000.
The £9,000 grant is available to owner-occupiers and private landlords in England and Wales with an existing oil or LPG boiler. The heat pump must be installed by an MCS-certified installer, and homes on mains gas or electric heating are not eligible for this higher rate.
Yes, the scheme is capped with £150 million allocated for the 2024–25 financial year, and grants are awarded on a first-come, first-served basis. The previous £5,000 grant was fully subscribed within months in some regions, so early application from 23 October 2024 is advised.
With electricity capped at 24.5p per kWh and a heat pump's Seasonal Coefficient of Performance of 3.5, heating costs about 7p per kWh, comparable to oil at 6p per kWh but with lower carbon emissions. For LPG users paying up to 10p per kWh, a heat pump is cheaper to run from day one.
Yes, Scotland operates its own Home Energy Scotland scheme, offering up to £9,000 for heat pumps regardless of current heating type, plus an additional £7,500 for households on certain benefits. Northern Ireland has a separate system with a £7,500 grant under the Northern Ireland Heat Pump Grant.
