Heat pump installations in the UK fell 12% last year. That is the first drop since the government launched the Boiler Upgrade Scheme in 2022, and it comes just as ministers cut the upfront grant from £7,500 to £5,000. The Climate Change Committee, the government’s own climate watchdog, has now warned that growth has stalled, and that the 600,000 annual installations needed by 2028 are slipping out of reach.
As reported by the BBC, the watchdog’s annual progress report points to a stark gap between ambition and reality. The UK installed roughly 60,000 heat pumps in 2024, one-tenth of the target. For homeowners considering the switch, the numbers now need closer scrutiny.
What the grant cut means for your wallet
The Boiler Upgrade Scheme previously covered nearly half the cost of a typical air-source heat pump installation, which runs between £12,000 and £15,000 for a standard 3-bed semi. The reduction to £5,000 leaves the homeowner paying £7,000 to £10,000 upfront, before any savings on heating bills. At current gas and electricity prices, the Energy Saving Trust estimates annual savings of £300 to £500 for a well-insulated home switching from an old gas boiler. That means a payback period of 14 to 20 years, assuming the grant stays at £5,000 and energy prices hold steady. Ofgem figures show the average gas-heated home spends about £1,200 a year on heating and hot water. A heat pump running at a coefficient of performance of 3.0 could cut that to £700–£900, depending on the tariff.
Who qualifies, and who doesn’t
The Boiler Upgrade Scheme is open to homeowners and small landlords in England and Wales who replace an existing fossil-fuel heating system with an air-source or ground-source heat pump. The property must have a valid EPC with no outstanding recommendations for loft or cavity-wall insulation. That catches many off guard: the government will not pay the grant unless the home is already reasonably insulated. For a typical Victorian terrace with single-glazed sash windows and uninsulated solid walls, the cost of upgrading the fabric first, internal wall insulation, floor insulation, new glazing, can add £10,000 to £25,000. The grant does not cover those works. The catch is that the heat pump will not perform efficiently in a draughty home, so the homeowner must spend before they can save. The government’s own impact assessment, published last year, admitted that fabric-first requirements could exclude up to 40% of eligible homes.
Why the stall matters for your EPC and property value
An EPC rating of C or above is increasingly required for rental properties, and many buyers now prioritise low running costs. A heat pump can lift a D-rated home to a B or C, adding an estimated 5–10% to its market value, according to research by Nationwide and the Energy Saving Trust. But the slowdown in installations means fewer homes will achieve that uplift. The Climate Change Committee’s report notes that the government is also phasing out the £400 million Social Housing Decarbonisation Fund, which helped retrofit social homes. For private homeowners, the main route to a heat pump remains the Boiler Upgrade Scheme, and that route just got narrower. The committee recommends the government restore the grant to £7,500 and extend it to cover insulation upgrades. Without that, the 2028 target of 600,000 installations a year looks like a fantasy.
Homeowners considering a heat pump should act before any further cuts. The current £5,000 grant is guaranteed until March 2028, but the budget is capped at £1.5 billion, first come, first served. Applications can be made through Ofgem’s portal, and the installer handles the paperwork. A smart tariff like Octopus Flux or OVO Heat Pump Plus can cut running costs further by charging the heat pump’s thermal store during off-peak hours. The real question is whether the government will listen to its own watchdog and reverse the cut, or let the stall turn into a slide.
Frequently Asked Questions
Yes, but only if your EPC has no outstanding recommendations for loft or cavity-wall insulation. If it does, you must install those first, at your own cost, before the grant is paid. Solid-wall insulation is not a requirement, but the heat pump will be less efficient without it.
The scheme runs until March 2028, but funding is capped at £1.5 billion. Once that runs out, applications close. Installations have been rising slowly, so the budget may last another two to three years, but early application is recommended.
