Boiler Upgrade Scheme grant rises to £9,000 for oil-heated homes

From 21 July, households heating with oil will be eligible for a £9,000 grant to install a heat pump, nearly double the current £5,000. That is a concrete shift in the economics of decarbonising rural homes, where oil boilers pump out roughly 8.5 tonnes of CO₂ per year per household, according to government data.

As reported by Installer Online, the increase comes as part of the government’s wider push to install 600,000 heat pumps annually by 2028. For the 1.5 million UK households still on heating oil, mostly in Scotland, Northern Ireland, and rural England, this is a significant policy change. It marks the point when the upfront cost of a heat pump falls below the cost of a new oil boiler.

Who qualifies, and who doesn’t

The £9,000 grant applies only to homes currently using heating oil, liquid petroleum gas (LPG), or other fossil fuels for central heating. Gas-heated homes remain eligible for the standard £5,000 grant. The property must have a valid Energy Performance Certificate with no outstanding recommendations for loft or cavity-wall insulation, a rule built to prevent heat pumps from running inefficiently in draughty homes.

Applicants must use an MCS-certified installer, and the grant is deducted from the invoice before payment. The scheme is capped at 50,000 grants per year across all fuel types, though take-up has historically been low: only 28,000 grants were claimed in 2023–24, according to Ofgem data. The £9,000 boost is intended to accelerate uptake among oil customers, who face the highest heating costs and the steepest carbon penalties.

What it costs a typical 3-bed semi

A typical air-source heat pump installation for a 3-bed semi costs between £10,000 and £12,000, including the unit, labour, and any necessary radiator upgrades or hot water cylinder replacement. With the £9,000 grant, the homeowner pays £1,000–£3,000, comparable to a new oil boiler, which costs around £2,500–£4,000 installed.

The running costs are where the savings appear. Heating oil currently costs about 6.5p per kWh, while a heat pump with a seasonal coefficient of performance (SCOP) of 3.5 delivers heat at roughly 4.5p per kWh (based on the October 2024 price cap). That is a 30% reduction on the heating bill, around £350 a year for a home using 15,000 kWh of heat annually. Over a 15-year lifespan, the net saving after installation costs is roughly £4,000–£5,000.

The EPC and property value angle

Installing a heat pump typically lifts an EPC rating from D to C, and often to B if combined with good insulation. That matters because from 2028, the government plans to require a minimum EPC rating of C for new tenancies, and mortgage lenders are increasingly offering green deals, lower rates for homes rated C or above. A heat pump also removes the need for an oil tank, which can be a selling point for buyers worried about leaks, theft, or the smell.

The catch is that not every oil-heated home is suitable. Properties with poor insulation, single-glazed windows, or undersized radiators will need additional work, typically £1,000–£3,000, before a heat pump can operate efficiently. The Energy Saving Trust recommends a free home energy assessment to identify required upgrades before applying for the grant.

What to do now

If you heat with oil or LPG, the window opens on 21 July. Find an MCS-certified installer through the Microgeneration Certification Scheme website. Get at least three quotes, and ask each to include a heat-loss calculation and a proposed system design. Check your EPC, if it shows insulation recommendations, address those first. The £9,000 grant is not retrospective, so do not install before the date. Applications go through your installer, and the grant is deducted from the final invoice. The scheme runs until 2028, but with a 50,000-per-year cap, early action reduces the risk of missing out.