Heat pump rules are changing: how to reduce the cost of installation
The rules around installing a heat pump will change on 29 May, making it easier for some homeowners. We look at how much a heat pump costs, how the £7,500 government grant works, and other discounts available
The heat pump installation rules will change on 29 May, potentially making it easier and quicker for homeowners to switch from gas boilers.
As part of the government’s Warm Homes Plan, heat pumps will no longer need to be installed at least one metre from a property boundary, and larger air source heat pumps will be allowed under permitted development rights.
Experts say the changes mean most homeowners won’t need to wait for local council approval before installing a heat pump, removing a significant barrier.
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The rules will also be relaxed for electric vehicle (EV) chargers; currently they cannot be installed where an electrical outlet would face onto and be within two metres of a highway.
Russell Smith, co-founder of Ecofurb, a home energy efficiency service, comments: “The removal of planning restrictions for heat pumps will make it far easier and quicker for more homeowners to install them.
“This is especially important for those in flats, terraced homes or properties with compact outdoor spaces – who were previously unable to access heat pumps under the old rules, and now allows them to more easily consider air-to-air heat pumps, in particular.”
About 1% of UK homes have a heat pump. The number is rising each month, with more and more homeowners applying for the £7,500 government grant, part of the Boiler Upgrade Scheme (BUS).
There was a record number of applications for BUS grants in March, with 4,028 applications received, up 88% on the same month last year, according to the Department for Energy Security and Net Zero.
The total number of heat pump sales in the UK was just under 100,000 last year, according to the Heat Pump Association.
However, this is well below the government's target of 600,000 a year by 2028. Earlier this year, the Climate Change Committee (CCC), which advises the government, said half of homes should have heat pumps within 15 years, while four in five cars should be electric, also by 2050.
The National Audit Office (NAO) has previously criticised the low take-up, saying sales will need to increase significantly to meet government targets.
It attributes the low number of heat pumps in people’s homes to several factors, including limited public awareness of the technology, higher costs compared to gas boilers, and the absence of long-term financial support for UK households.
Ruth Emery
Ruth Emery installed a heat pump in her home six months ago. She qualified for the £7,500 government grant, part of the Boiler Upgrade Scheme (BUS). Ruth has shared five lessons she's learnt after getting a heat pump in a separate article.
With a range of bill hikes kicking in last month, such as council tax rises, mobile and broadband hikes and higher water bills, you might be worried about the cost of getting a heat pump. However, there are ways to reduce the installation costs.
If you’re thinking about getting a heat pump, we run through how they work and what financial support is on offer, as well as the rule changes that should make installing one easier.
In addition to the government grant, you may find your mortgage lender offers cashback or your energy supplier has an incentive.
How do heat pumps work?
Heat pumps allow you to heat your home and provide hot water in an environmentally-friendly way. They are significantly more efficient than gas boilers, and produce less CO2 emissions than other heating systems. According to the Energy Saving Trust, for every unit of electricity a heat pump uses, it produces three units of heat.
Heat pumps also last longer than gas boilers, typically running for 20 years compared to the 10 to 15 years you'll get from a boiler.
There are two main types of heat pump: air source and ground source. Air source pumps heat the air outside, and are the most common in the UK. Ground source heat pumps transfer heat from the ground outside to heat your home.
How much does it cost to install a heat pump?
The average cost of installing an air source heat pump is around £13,000, according to official figures. Ground source heat pumps are considerably more, at about £28,000 on average.
The government’s Boiler Upgrade Scheme offers a grant of £7,500 towards this cost, which means you could still pay £5,500 for an air source heat pump (based on the average installation cost).
However, for some customers, the cost can be thousands more depending on the type and size of their home. A larger property may need a bigger, more expensive heat pump, for example. Replacing radiators or adding insulation can also push the price up.
According to Octopus Energy, about a third of homes require scaffolding – this is usually required when the hot water cylinder is installed at a height, either upstairs or in the loft. This can add on an extra £800 to £1,000. Planning permission may also be needed, which can cost between £250 and £330.
On the other hand, the bill can come in a lot cheaper for some people. Octopus Energy says most of its heat pump quotes are lower than £5,000 (once the £7,500 grant is deducted).
Newer homes, smaller homes, better insulated properties, those with low energy usage, and those which require fewer changes (like radiator swaps) to make the switch, often get a cheaper heat pump quote.
How does the government’s £7,500 grant work?
The government’s Boiler Upgrade Scheme gives eligible households up to £7,500 off the cost of installing an air source or ground source heat pump.
If you’re buying a heat pump for a home or small non-domestic building in England or Wales, and you’re replacing an existing fossil fuel system (such as an oil or gas boiler, or storage or panel heaters), you should be eligible for the full £7,500.
Note that the property must not be a new-build or social housing, although self-build properties are eligible.
The heat pump installer – who must be MCS-certified - applies for the grant and takes it off the price you pay.
If you live in Scotland, the Home Energy Scotland grant and loan scheme pays up to £7,500 for air-source heat pumps, plus a further £1,500 for households that qualify for a rural uplift. An extra £7,500 of funding is available as an optional interest-free loan.
What other discounts are available?
In addition to the £7,500 government grant, there are some lesser-known incentives and discounts for installing a heat pump. The biggest ones could come from your mortgage provider. Here are some of the deals available:
Halifax mortgage customers can get £2,000 via the bank’s “Green Living offers”. You’ll need to have applied for a mortgage or additional borrowing with Halifax after 31 July 2024, and have a Halifax or Bank of Scotland current account, to qualify.
Lloyds customers can get £2,000 cashback with the Eco Home Reward for installing an air or ground source heat pump. To qualify, you’ll need to have applied for a new Lloyds mortgage, additional borrowing, or switched to a new deal, after 31 July 2024; installed the heat pump within one year of completing the borrowing, and hold a Club Lloyds bank account.
Barclays’ Greener Home Reward scheme also pays £2,000 cashback for customers installing a heat pump. To be eligible, you must have a Barclays residential mortgage with a direct debit and up-to-date payments.
Nationwide offers its mortgage customers interest-free loans worth between £5,000 and £20,000 to pay for energy-efficient improvements, such as air source heat pumps and insulation. Borrowers can enjoy a 0% period for the first two or five years.
Ovo offers up to a year of free heating for customers planning to get a heat pump in future. The energy supplier’s Beyond scheme allows customers to “bank” one month of free heating for every two months they are with Ovo; the money can be redeemed (worth a maximum of £342) when a heat pump is purchased from Ovo.
The government is relaxing the rules on installing heat pumps from 29 May, 2025.
The rule that no air source heat pump can be fitted within one metre of the boundary of a property under permitted development will be scrapped. The maximum size of air source heat pump allowable under permitted development will be increased from 0.6 m3 to 1.5 m3.
The government is also doubling the number of air source heat pumps permitted, from one to two for detached houses. Plus, it is allowing air-to-air heat pumps that can also provide a cooling function to benefit from the same permitted development rights as air-to-water heat pumps.
According to Property Mark, the professional body for property agents, the current requirements often block installations for flats, terraced homes, and properties with small outdoor spaces.
“The rule change will mean fewer applications to local authorities and a streamlined path for property owners wishing to decarbonise their portfolios,” says Property Mark.
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Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.
She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times.
A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service.
Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.
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