The Boiler Upgrade Scheme is about to get a lot more generous for rural homeowners. From October 2025, the grant for installing an air-source heat pump will jump from £7,500 to £9,500, but only for properties currently heated by oil. The move, as reported by The Cool Down, is part of a wider push to wean off-grid homes off fossil fuels.
Who qualifies, and who doesn’t
The higher grant applies only to homes in England and Wales that use oil heating. Properties on mains gas are not eligible for the uplift; they remain at the standard £7,500. You must also have a valid Energy Performance Certificate with no outstanding recommendations for loft or cavity wall insulation, Ofgem wants the building fabric sorted before it subsidises the heat source. The grant covers air-source heat pumps, ground-source heat pumps, and water-source heat pumps. Biomass boilers are included but only for homes in rural areas not connected to the gas grid.
What it costs a typical 3-bed semi
A typical air-source heat pump installation for a 3-bed semi costs between £11,000 and £14,000, according to figures from the Energy Saving Trust. With the £9,500 grant, the homeowner’s share falls to between £1,500 and £4,500. That’s comparable to a new oil boiler (around £3,000–£5,000 installed), but the running costs are lower: heating a 3-bed semi with an oil boiler costs roughly £1,200 a year at current prices, while a heat pump with a good SCOP of 3.5 costs around £700–£800 on standard electricity tariffs. The gap widens if you switch to a heat-pump-specific tariff such as Octopus Cosy or OVO Heat Pump Plus.
The catch, and why it matters
But the headline grant hides a few snags. First, the scheme is capped at 50,000 vouchers per year across England and Wales, about the same as the current BUS cap. If demand surges, the pot could run out before the end of the financial year. Second, the higher grant only applies to oil-heated homes, not those on LPG, coal, or electric storage heaters. The government estimates 1.5 million homes use oil heating, but many more use other off-grid fuels. Third, you need an EPC rating of D or better to qualify for the BUS at all. Homes rated E, F, or G must first upgrade insulation, a cost that can run to thousands of pounds before they see a penny of heat pump subsidy.
How to apply, and by when
Applications open on 1 October 2025 through the Ofgem BUS portal. You must get a quote from an MCS-certified installer before applying. The voucher is valid for 12 weeks, so don’t apply until you’re ready to proceed. The scheme runs until 31 March 2028, but the higher oil-heat pump grant is only guaranteed until that date, it could be extended or cut depending on the next spending review. Households on oil heating should start the process now: get an EPC, check your insulation, and ask three installers for quotes. The grant won’t cover everything, but it turns a heat pump from a luxury into a realistic upgrade for most rural homes.
Frequently Asked Questions
No. The higher grant is only for homes currently using oil. LPG, coal, and electric storage heaters remain at the standard £7,500 rate. The government has said it may expand eligibility in future, but no date has been confirmed.
Most air-source heat pumps in England and Wales are permitted development, but you must comply with the Microgeneration Certification Scheme standards and keep the unit at least 1 metre from your property boundary. Check with your local planning authority if you live in a conservation area or listed building.
