Exeter heat pump grants signal wider shift in UK funding

Exeter City Council has opened applications for heat pump grants, the latest in a patchwork of local schemes that aim to nudge homeowners off gas boilers. The council, working with central government, will offer up to £7,500 towards installation for qualifying households. This is not a standalone initiative: it mirrors the national Boiler Upgrade Scheme (BUS) which has already paid out over £100m since 2022.

As reported by Exeter City Council, the scheme targets homes with low EPC ratings and those currently using oil or electric heating, a demographic that stands to save the most. But the devil, as ever, is in the eligibility criteria.

Who qualifies, and who doesn’t

The Exeter grant is means-tested: households with a combined income under £40,000, living in properties with an EPC rating of D or below, are first in line. That’s a narrower net than the BUS, which is open to all owner-occupiers and small landlords, regardless of income. But the BUS requires your home to have an EPC rating of C or above, a rule that has blocked many older, draughty homes from accessing funds.

What this misses: the UK’s housing stock is among the oldest in Europe. Nearly 8 million homes have an EPC rating of D or worse, according to the Energy Saving Trust. For those households, the Exeter model offers a lifeline, provided they can first improve insulation, which costs £2,000–£5,000 for a typical 3-bed semi. Without that, the heat pump will struggle to perform efficiently, and your bills may rise rather than fall.

What it costs a typical 3-bed semi

An air-source heat pump installation for a 3-bed semi typically costs between £7,000 and £13,000, including labour and equipment. The grant shaves £7,500 off that, leaving you with a net cost of £0–£5,500. Running costs are roughly 20–30% lower than a gas boiler, Ofgem data shows, assuming the system is properly sized and the home is well insulated.

But the upfront saving can vanish if your property needs major insulation work first. Cavity wall insulation costs £600–£1,200; loft insulation, £300–£600. The total bill can approach £7,000 before the heat pump even arrives. The government’s own impact assessment estimates that grant take-up among low-income households has been just 12% of the target, because the insulation hurdle remains unfunded.

EPC impact, and resale value

A heat pump can lift your EPC rating by up to 2 bands, from D to B in some cases, according to the BRE. That translates into a higher property valuation: estate agents estimate a B-rated home sells for 5–10% more than a D-rated equivalent. For a £300,000 house, that’s £15,000–£30,000 extra, far more than the installation cost.

Yet the catch is timing. Most grants, including Exeter’s, have limited pots. The BUS has already seen its annual budget of £150m oversubscribed in some regions. Homeowners who wait risk missing out entirely. The Energy Saving Trust recommends applying within 6 months of deciding to install, as processing times can stretch to 12 weeks.

What you should do now

First, check your EPC rating via gov.uk. If it’s D or below, prioritise insulation before applying for a heat pump grant. Second, compare local and national schemes: Exeter residents can apply for both the council grant and the BUS, but you cannot double-claim for the same installation. Third, get at least three quotes from MCS-certified installers, prices vary by up to 40% across the UK.

Households on oil or electric heating should move first: those systems cost 3–4 times more to run than a heat pump, according to Ofgem’s fuel cost comparison. The payback period, even without a grant, can be under 5 years. With the grant, it’s closer to 2 years.

Applications for the Exeter scheme close on 31 March 2025, or when funds run out, whichever comes first. The BUS is open until 2028, but its annual budget resets each April. Act before the next budget round, or risk being left with a cold home and a higher bill.