A heat pump costs £7,000 to £13,000 installed after the £7,500 grant
The Boiler Upgrade Scheme (BUS) provides a flat £7,500 grant for an air source heat pump installation in England and Wales, reducing the upfront cost. Total installed cost before the grant typically ranges from £9,000 to £18,000 depending on property size, system complexity, and the chosen heat pump model (GOV.UK, 2026). The net cost after the grant is usually between £7,000 and £13,000. That makes it comparable to a new gas boiler installation.
A heat pump costs £7,000 to £13,000 installed after the £7,500 Boiler Upgrade Scheme grant. Annual running costs for a 3-bed home are £650 to £1,100, depending on your heat pump's efficiency and home insulation.
- Net cost after £7,500 BUS grant is £7,000-£13,000 installed.
- Annual running costs range from £650 to £1,100 for a 3-bed home.
- Ground source heat pumps cost £18,000-£30,000 before the grant.
- A SCOP of 3.5 can cut yearly heating bills to around £700.
- Check insulation quality first to maximise heat pump efficiency.
- A heat pump costs £7,000 to £13,000 installed after the £7,500 grant
- The annual running cost is £650 to £1,100 for a typical three-bedroom home
- The total payback period is 8 to 15 years when replacing a gas boiler
- Quick numbers a table of costs and savings
- The £7,500 Boiler Upgrade Scheme grant is the main reason heat pump costs have fallen
- A heat pump costs less to run than oil or LPG, but more than gas in most homes
- Eligibility and installer certification are essential for grant and performance
The Energy Saving Trust estimates that a typical installation for a three-bedroom semi-detached home costs around £11,000 before the grant, leaving a net cost of £3,500 after the £7,500 BUS deduction (Energy Saving Trust, 2026). Larger homes or those requiring additional radiator upgrades may push the pre-grant cost toward the higher end of the range. Ground source heat pumps cost more, typically £18,000 to £30,000 before a £7,500 BUS grant, with a higher £15,000 grant available for ground source installations.
The annual running cost is £650 to £1,100 for a typical three-bedroom home
A heat pump uses electricity, currently priced at around 27p per kWh under the October 2026 price cap, to generate 3–4 kWh of heat for every 1 kWh of electricity used (Ofgem, 2026). For a home with a heat demand of 12,000 kWh per year, the annual electricity cost for heating and hot water is approximately £810 at an average efficiency (SCOP) of 3.0. Running costs vary based on the heat pump’s Seasonal Coefficient of Performance (SCOP), your home’s insulation, and the size of the property.
The SCOP is the ratio of heat output to electricity input over a full year. A higher SCOP means lower running costs. The Energy Saving Trust’s running cost calculator shows that a well-insulated home with a modern heat pump (SCOP 3.5) could pay around £700 per year, while an older, draughtier property with a lower SCOP of 2.8 could see costs closer to £1,100 (Energy Saving Trust, 2026). Using a heat-pump-specific electricity tariff can reduce these figures further.
The total payback period is 8 to 15 years when replacing a gas boiler
The payback calculation compares the upfront cost of a heat pump (after grant) against the annual savings from not buying gas. A heat pump saves roughly £150 to £300 per year compared to a gas boiler in a typical semi-detached home, based on 2026 energy prices (DESNZ, 2026). With a net cost of £10,000, the simple payback is between 10 and 15 years; shorter paybacks occur in homes with high heat demand or off-gas-grid oil/LPG systems.
The Department for Energy Security and Net Zero (DESNZ) payback analysis shows that homes using oil or LPG heating typically achieve payback in 8 to 12 years, because their current fuel costs are significantly higher than gas. For gas-connected homes, the payback is longer, often 12 to 15 years, unless you combine the heat pump with solar panels or a battery to reduce electricity costs. The payback period also shortens if you qualify for the higher ground source heat pump grant.
Quick numbers a table of costs and savings
| Item | Estimated cost/saving | Source |
|---|---|---|
| Heat pump installed cost before grant | £9,000 – £18,000 | Energy Saving Trust, 2026 |
| Heat pump net cost after £7,500 BUS grant | £7,000 – £13,000 | GOV.UK, 2026 |
| Gas boiler installed cost | £2,500 – £4,500 | Energy Saving Trust, 2026 |
| Annual heat pump running cost (3-bed home) | £650 – £1,100 | Energy Saving Trust, 2026 |
| Annual gas boiler running cost (3-bed home) | £800 – £1,100 | Ofgem, 2026 |
| Annual saving with heat pump (vs gas) | £150 – £300 | DESNZ, 2026 |
| Simple payback period (vs gas) | 10 – 15 years | DESNZ, 2026 |
The £7,500 Boiler Upgrade Scheme grant is the main reason heat pump costs have fallen
The BUS grant is available to homeowners in England and Wales, covering the majority of the installation cost. You can apply through an MCS-certified installer, who deducts the grant from your invoice. The grant is not means-tested and is available for both air source and ground source heat pumps (with a higher grant for ground source) (GOV.UK, 2026).
To claim the grant, you must own the property or have the landlord’s permission. The heat pump must be installed by an MCS-certified installer, and the system must be on the MCS product list. The grant is applied at the point of installation, meaning you do not need to pay the full amount upfront and then claim it back. The installer handles the paperwork and deducts the £7,500 from your final invoice. This has made heat pumps significantly more affordable since the grant was introduced.
A heat pump costs less to run than oil or LPG, but more than gas in most homes
For homes not connected to the gas grid, a heat pump typically saves £300 to £700 per year compared to oil or LPG heating (Energy Saving Trust, 2026). For gas-connected homes, the annual running cost is often £100 to £200 higher than a gas boiler, depending on heat pump efficiency and tariff. The gap narrows if you use a heat-pump-specific electricity tariff (e.g., Economy 7 or Agile tariffs) or have solar panels.
The Energy Saving Trust’s fuel cost comparison table shows that oil heating costs roughly £1,200 per year for a typical three-bedroom home, while LPG costs around £1,400. A heat pump in the same home would cost approximately £800 to £900 per year, delivering clear savings. For gas-connected homes, the annual gas boiler cost is around £850 to £1,000, meaning the heat pump may be slightly more expensive to run unless you optimise your tariff or insulation. how to compare heat pump running costs with different tariffs
Eligibility and installer certification are essential for grant and performance
To claim the £7,500 BUS grant, the installer must be MCS (Microgeneration Certification Scheme) certified (MCS, 2026). The heat pump itself must be on the MCS product list (or equivalent) to qualify. For safety and performance, check the installer holds TrustMark registration for consumer protection (TrustMark, 2026).
Using a certified installer ensures the system is designed and installed correctly, which directly affects the heat pump’s efficiency and your running costs. A poorly installed heat pump can achieve a lower SCOP, increasing your annual bills. The MCS website lists all certified installers and products. You should obtain at least three quotes from different MCS-certified installers before proceeding. what to check in a heat pump installation quote
Frequently Asked Questions
After the £7,500 Boiler Upgrade Scheme grant, an air source heat pump costs £7,000 to £13,000 installed. The Energy Saving Trust reports a typical 3-bed semi costs £11,000 before the grant, leaving a net cost of £3,500.
Annual running costs are £650 to £1,100 for a typical 3-bedroom home. Ofgem's October 2026 price cap sets electricity at 27p per kWh, and a heat pump with a SCOP of 3.0 costs about £810 per year.
Yes, a heat pump can be cheaper to run than a gas boiler when the SCOP is 3.0 or higher. The Energy Saving Trust estimates savings of up to £300 per year compared to a gas boiler in a well-insulated home.
A ground source heat pump costs £18,000 to £30,000 before the £7,500 BUS grant. A higher £15,000 grant is available for ground source installations, reducing the net cost to £3,000-£15,000.
Yes, insulation significantly affects running costs. A well-insulated home with a SCOP of 3.5 pays around £700 per year, while a draughty property with a SCOP of 2.8 can cost up to £1,100, according to the Energy Saving Trust.
