The Home Upgrade Grant phase 2 (HUG2) is available to owner-occupiers and private tenants in England living in off-gas-grid homes with an Energy Performance Certificate (EPC) rating of D, E, F or G, and a gross household income below £31,000. Eligibility is determined by your local authority, which manages HUG2 funding for low-carbon heating and insulation measures (GOV.UK, 2026).
HUG2 is not a social housing grant in the traditional sense. It targets low-income households in the worst-performing off-grid properties, but social housing tenants (those renting from a council or housing association) are explicitly excluded from applying. The grant is delivered by 129 local authorities in England, with each council setting its own application process and priority areas. You must live in a property that does not use mains gas for heating, such as homes using oil, LPG, coal or electric storage heaters.
Owner-occupiers and private tenants qualify
If you own your home or rent from a private landlord, you can apply through your local council. The household income must be under £31,000, verified via tax returns or benefits statements. The property must have an EPC rating of D or lower, meaning it is poorly insulated and expensive to heat. The grant covers measures such as air source heat pumps, solar panels, loft insulation and cavity wall insulation. Energy Saving Trust notes that a typical 3kWp solar array generates around 2,650 kWh/year, significantly reducing heating costs (Energy Saving Trust, 2026).
Social housing tenants are not eligible
If you live in social housing (council or housing association), you cannot apply for HUG2. Instead, your landlord is responsible for improving energy efficiency under separate schemes like the Social Housing Decarbonisation Fund. The government states that HUG2 is designed for off-gas-grid homes that are not covered by other programmes (GOV.UK, 2026). If you are a social tenant, contact your landlord about their retrofit plans, they may qualify for other funding.
Local authorities decide final eligibility
Each participating council sets its own criteria within the national framework. Some may prioritise homes with the lowest EPC ratings or those in fuel poverty. You must check your local council’s website to see if they are still accepting applications. The grant covers 100% of eligible measure costs, with no contribution required from you. Ofgem confirms that installations must be completed by MCS-certified installers to qualify (MCS, 2026). If your property is not off-grid, you may still qualify for other schemes like the Great British Insulation Scheme.
A worked example
A household in a 1930s semi-detached home in Leeds using oil heating would typically pay £8,400 upfront for an air source heat pump and loft insulation after a £7,500 BUS grant is applied, assuming they meet the £31,000 income cap and hold an EPC rating of E. This example comes from Energy Saving Trust modelling for a 90m² property off the gas grid, where the existing oil boiler costs roughly £1,450 a year to run. After installing an air source heat pump with improved insulation, the annual heating bill drops to around £620, saving £830 each year. The payback period on the £8,400 investment is just over ten years, and over a 25-year lifespan the total savings reach approximately £20,750, assuming 0% VAT until March 2027 and no major maintenance costs. Your local authority manages the application, so check with Leeds City Council for specific HUG2 allocation in your area.
| Item | Figure |
|---|---|
| Upfront cost after grants | £8,400 |
| Yearly savings | £830 |
| Payback period | 10.1 years |
| 25-year lifetime savings | £20,750 |
What homeowners often get wrong
The most common mistake is assuming HUG2 covers social housing tenants, but it only helps owner-occupiers and private renters off the gas grid. Here are three frequent errors that cost people time and money.
- Thinking HUG2 is for council or housing association homes Social housing tenants are explicitly excluded from HUG2 funding, and applying wastes your time. Instead, ask your landlord or council about the Social Housing Decarbonisation Fund (SHDF) for upgrades to that property.
- Ignoring the off-gas-grid rule Many homeowners in villages or rural areas believe they qualify because they have low income, but if your home uses mains gas for heating, HUG2 does not apply. You must be on oil, LPG, coal or electric storage heaters to be eligible, otherwise your application is rejected immediately.
- Applying through a central government portal There is no national application system, and searching online often leads to scams or dead ends. You must contact your specific local authority, which sets its own process, and missing this step means you lose the £31,000 income window entirely.
Quick reference
- HUG2 eligibility requires a gross household income under £31,000 and an EPC rating of D, E, F or G.
- Your home must be off the mains gas grid, using oil, LPG, coal or electric storage heaters instead.
- Only owner-occupiers and private tenants can apply, not social housing tenants renting from a council or housing association.
- The average air source heat pump installation costs £7,500 to £12,000 before the BUS grant of £7,500 reduces your outlay.
- Applying through your local authority is mandatory, and each of the 129 participating councils sets its own deadline and priority areas.
Frequently Asked Questions
Owner-occupiers and private tenants in England with an income below £31,000, an EPC rating of D-G, and an off-gas-grid home. Social housing tenants are excluded per GOV.UK 2026.
No. Social housing tenants renting from a council or housing association cannot apply. The grant is only for owner-occupiers and private tenants.
Contact your local authority, as each of the 129 participating councils manages its own application process. Provide proof of income and EPC rating.
