The Boiler Upgrade Scheme grant for air-source heat pumps will rise to £7,500 from 23 October, a 50% increase on the current £5,000. The Department for Energy Security and Net Zero confirmed the change last week, as reported by Surrey Live. For a typical 3-bed semi with gas central heating, this cuts the upfront cost from roughly £13,000 to £5,500, still a hefty sum, but far less than the £8,000–£10,000 that deterred most households last year.
Who qualifies, and who doesn’t
The scheme is open to homeowners and small landlords in England and Wales who replace an existing fossil-fuel boiler with an air-source or ground-source heat pump. The cap is one grant per property, and you must use an MCS-certified installer. Ofgem administers the payments, which are deducted from the installer’s invoice, you never see the cash. The catch is that the grant is first-come, first-served until the £450m annual budget runs out. In 2022–23, the scheme underspent by £80m because too few installers were accredited. That bottleneck has eased slightly: MCS now lists 1,200 certified heat pump installers, up from 900 a year ago, but demand is expected to surge after the grant rise.
What it costs a typical 3-bed semi
A full heat pump installation, including the unit, hot water cylinder, pipework, and controls, typically costs between £8,000 and £14,000 for a 3-bed semi with 8–10 radiators. The new £7,500 grant brings the homeowner’s share to £500–£6,500. Add in the government’s 0% VAT on heat pumps (extended to 2027), and the net cost drops further. But the real variable is heat loss. If your home has single glazing or uninsulated cavity walls, the heat pump will struggle to keep rooms warm at a reasonable cost. The Energy Saving Trust recommends a minimum of 100mm loft insulation and cavity-wall fill before even considering a heat pump. Without it, your running costs could be higher than a modern gas boiler, roughly 12p per kWh for electricity versus 7p per kWh for gas, according to current Ofgem price cap rates.
EPC impact, and the insulation catch
A heat pump can lift your EPC rating by 2–5 points, depending on your starting band. A D-rated home moving to C could see its estimated energy costs drop by £200–£400 a year. But the EPC methodology assumes a heat pump operates at a coefficient of performance (CoP) of 3.0 or higher. In a draughty Victorian terrace, the actual CoP often falls to 2.0–2.5, eroding the savings. Under the previous grant scheme, 40% of heat pump installations failed to achieve the expected efficiency because of inadequate insulation. The £7,500 grant is generous, but it should come with a mandatory heat-loss survey, something the scheme currently lacks. Homeowners should budget an extra £1,000–£3,000 for insulation upgrades before the heat pump goes in.
What to do now
If you’re considering a heat pump, book a heat-loss calculation with an MCS-certified installer before 23 October. The grant rise is real, but the installer queue will lengthen fast. Check your EPC for insulation gaps, and apply for the Great British Insulation Scheme (free or subsidised loft and cavity fill) if your band is D or below. The boiler upgrade scheme runs until 2028, but the £450m budget resets each financial year, and this year’s allocation could be gone by Christmas.
Frequently Asked Questions
Yes, but the grant for ground-source heat pumps remains at £7,500, the same as the new air-source figure. Ground-source installations typically cost £20,000–£35,000, so the grant covers a smaller proportion of the total.
Yes. Solar panels can improve your heat pump's efficiency by providing cheaper electricity during daylight hours. The Boiler Upgrade Scheme does not penalise homes with existing renewables.
