Heat pump grant rises to £7,500 as government targets 600,000 installations

600,000 heat pumps a year by 2028, that is the government’s target, and the £7,500 grant confirmed this week is the bluntest tool in the box to get there. The Boiler Upgrade Scheme (BUS) will increase from £7,000 to £7,500 from 1 October 2025, as reported by Teesside Live. For a homeowner in a typical 3-bed semi, that £500 increase is the difference between a project that pencils out and one that stays on the wishlist.

Who qualifies, and who doesn’t

The BUS is open to homeowners and small landlords in England and Wales. You need to replace an existing fossil fuel heating system, gas, oil, LPG, or electric storage heaters, with an air source or ground source heat pump. The property must have a valid Energy Performance Certificate (EPC) with no outstanding recommendations for loft or cavity wall insulation. Ofgem administers the scheme and pays the grant directly to the installer, so the discount appears on your quote upfront.

The catch is timing. The scheme has a fixed annual budget, and when the money runs out, applications close until the next financial year. In 2024-25, the fund was fully allocated by February. Anyone planning an installation for autumn 2025 should book an MCS-certified installer now to secure a slot. The grant is not available for new-build homes or for properties that already have a heat pump.

What it costs a typical 3-bed semi

A standard air source heat pump installation for a 3-bed semi with good insulation costs between £7,000 and £13,000, according to the Energy Saving Trust. With the £7,500 grant, the homeowner pays £2,500 to £5,500. Running costs depend on the heat pump’s efficiency (measured by its SCOP, Seasonal Coefficient of Performance) and the price of electricity versus gas. At current price cap rates (24.5p/kWh for electricity, 6.0p/kWh for gas), a heat pump with a SCOP of 3.5 will cost about the same to run as a gas boiler. If electricity prices fall relative to gas, as they have in other European markets, the savings grow.

But the upfront saving is only half the story. Replacing a gas boiler with a heat pump can lift an EPC rating from D to C, or from C to B. That improvement adds an estimated 4-8% to property value, according to Nationwide Building Society research, roughly £5,000-£10,000 on a £250,000 home. The £500 grant increase effectively pays for itself in property uplift alone.

Why the government pushed the button now

The 600,000 annual installation target by 2028 is a political promise from the previous government that the current administration has not disowned. In 2023, only 36,000 heat pumps were installed under the BUS. The gap between ambition and reality is vast. The £500 increase is cheap for the Treasury, it costs roughly £300 million a year if all 600,000 installations claim it, but it signals that the government knows price is the primary barrier.

What this misses is the installation bottleneck. The UK has roughly 4,000 MCS-certified heat pump installers. To hit 600,000 installations a year, that number needs to treble. The grant alone will not train the workforce. The Heat Training Grant, which covers up to £500 per trainee, remains undersubscribed. Homeowners in some regions already report waiting 6-9 months for a quote.

What to do next

If you are considering a heat pump, the clock is ticking. The £7,500 grant applies from 1 October 2025, but installers will book up months in advance. Start by checking your EPC on gov.uk, if your loft insulation is less than 270mm or your cavity walls are unfilled, fix those first. Then get quotes from at least three MCS-certified installers. Ofgem’s website lists registered installers in your area. Applications for the BUS open on 1 October 2025 and close when the budget is exhausted, typically by February or March. Do not wait.