The UK Clean Heat Market Mechanism (CHMM) is a government policy requiring boiler manufacturers to sell a rising percentage of heat pumps each year, starting at 4% in 2026, or face a penalty of £3,000 per missing heat pump sale (GOV.UK, 2026). This mechanism aims to drive the shift from fossil-fuel boilers to low-carbon heating systems.
The CHMM applies to manufacturers and large importers of gas and oil boilers in the UK. It does not directly require homeowners to install heat pumps. Instead, it places an obligation on suppliers to ensure that a minimum proportion of their sales are heat pumps. If manufacturers fail to meet their target, they must pay a compliance fee per heat pump shortfall. The scheme is enforced by the Office for Product Safety and Standards.
How the Clean Heat Market Mechanism works
Under the CHMM, each boiler manufacturer is assigned a heat pump sales target based on their total boiler sales. For 2026, the target is set at 4% of their boiler sales volume, rising to 6% in 2027 and 10% by 2028 (Ofgem, 2026). Manufacturers can meet this target by selling domestic heat pumps, or by purchasing credits from other suppliers who exceed their targets. If they fall short, they must pay a £3,000 penalty per missing heat pump sale, with funds used to support heat pump deployment.
Who is affected by the CHMM
The mechanism directly impacts boiler manufacturers and importers, not individual homeowners. However, it may indirectly affect consumers through changes in pricing or availability of heating products. For example, manufacturers may raise boiler prices to cover compliance costs or offer heat pump deals to meet targets. The Energy Saving Trust notes that the cost of installing a typical air source heat pump ranges from £7,000 to £13,000 (Energy Saving Trust, 2026), though the Boiler Upgrade Scheme provides a £7,500 grant to eligible homeowners in England and Wales.
Exemptions and current challenges
Manufacturers that sell fewer than 1,000 boilers per year are exempt from the CHMM, as are those specialising in commercial or industrial heating systems (The Clean Heat Market Mechanism Regulations 2025, legislation.gov.uk). Some industry groups have raised concerns that the penalty structure could lead to higher boiler costs for consumers, particularly in rural areas where heat pump installation is less practical. The government has stated it will review the mechanism in 2027 to assess its impact on heat pump uptake and consumer affordability.
A worked example
A typical 1930s semi-detached home in the Midlands switching from a gas boiler to an air source heat pump costs around £12,500 before any support, but with the BUS grant of £7,500 the upfront price drops to £5,000. This home, with 100m² of floor area and moderate insulation, might use 12,000 kWh of heat per year. A modern heat pump with a Seasonal Coefficient of Performance (SCOP) of 3.5 would use roughly 3,430 kWh of electricity annually, compared to the boiler’s 12,000 kWh of gas. At current energy prices (27p per kWh for electricity and 6p per kWh for gas), the heat pump saves about £210 per year on heating bills. Glazing is standard-rated for VAT at 20%. The zero rate for energy-saving materials covers insulation, heat pumps and solar panels; HMRC names secondary and double glazing as excluded (VAT Notice 708/6). Over 25 years, total savings could reach £5,250, not accounting for maintenance or future energy price rises. The Energy Saving Trust confirms that well-insulated homes see the best returns from heat pumps.
| Item | Figure |
|---|---|
| Upfront cost after grants | £5,000 |
| Yearly savings | £210 |
| Payback period | 24 years |
| 25-year lifetime savings | £5,250 |
What homeowners often get wrong
The most common mistake is thinking the Clean Heat Market Mechanism forces you to install a heat pump immediately. This misunderstanding leads to unnecessary worry and poor timing of upgrades.
- Believing the CHMM is a ban on gas boilers The mechanism targets manufacturers, not homeowners, so you can still buy and use a gas boiler after 2026. The real risk is that manufacturers may raise boiler prices to cover their penalties, making replacements more expensive later.
- Assuming heat pumps don’t work in older homes Many think a Victorian terrace or 1930s semi cannot use a heat pump effectively. In reality, modern heat pumps work well in older homes with basic insulation upgrades such as loft and cavity wall insulation, and the BUS grant covers the cost of professional installation.
- Waiting for the perfect time to switch Some homeowners delay because they expect cheaper heat pumps or better grants in future years. The 0% VAT on heat pumps ends in March 2027 and the BUS grant offers £7,500 now, so delaying could mean missing these savings and facing higher boiler costs under the CHMM.
Quick reference
- The Clean Heat Market Mechanism requires boiler manufacturers to sell heat pumps equal to 4% of their boiler sales from 2026, rising to 10% by 2028.
- Manufacturers that fail to meet their heat pump sales target pay a £3,000 penalty per missing unit, which may increase boiler prices for consumers.
- Homeowners are not required to install a heat pump under the CHMM, but the policy aims to make heat pumps more widely available and affordable.
- The BUS grant provides £7,500 off an air source heat pump installation, and 0% VAT on heat pumps applies until March 2027.
- Heat pumps typically save £200–£300 per year on heating bills for a well-insulated three-bedroom semi-detached home, according to the Energy Saving Trust.
Frequently Asked Questions
No, the CHMM applies to boiler manufacturers and importers, not homeowners. Homeowners are not required to install heat pumps under this policy (GOV.UK, 2026).
Manufacturers must pay £3,000 per missing heat pump sale. These funds are used to support heat pump deployment (Ofgem, 2026).
The CHMM starts in 2026 with a 4% heat pump sales target. This rises to 6% in 2027 and 10% by 2028 (Energy Saving Trust, 2026).
