Heat pump grant demand hits a record: what it means for costs
Boiler Upgrade Scheme applications hit a record high just as the Budget capped funding. Here is what that means for heat pump prices and your timing.
If you are weighing up a heat pump, the grant is still available, but the funding behind it now has a ceiling. Demand is rising quickly, so it is worth getting quotes sooner rather than later.
What has happened
According to Nesta | UK innovation agency for social good, the latest official figures show Boiler Upgrade Scheme applications reached nearly 10,000 in September 2026. That is the highest monthly total on record and 118% up on June.
Nesta says two things are behind the surge:
- Off-grid households are using the £9,000 uplift grant.
- The gap between electricity and gas running costs is narrowing.
The figures followed the Budget, which includes steps to support clean heating, such as abolishing the gas standing charge. The Budget also capped ongoing Boiler Upgrade Scheme funding at £400 million a year, with future uplifts tied to inflation. Nesta's reading is that households are effectively "on the clock" to apply while the pot lasts.
What the grant is worth
The standing rules are unchanged:
- England and Wales: the Boiler Upgrade Scheme takes £7,500 off an air source or ground source heat pump. The installer must be MCS certified.
- Scotland: Home Energy Scotland offers a grant of up to £7,500, plus an optional £7,500 interest-free loan.
- VAT: installing energy-saving materials, including heat pumps, insulation, solar panels and batteries, is 0% VAT until 31 March 2027.
Our own figures include 20% VAT except where 0% applies, so check how an installer has treated VAT on any quote.
What it means for the cost of a heat pump
For an air source heat pump of the default 8 kW size, we currently put the typical mid-range cost at £12,900. The usual range is £10,100 – £16,800. Basic specifications start at £9,700, and premium systems reach £15,400. Those are before any grant. Our full breakdown is in the Air source heat pump.
We build these figures from labour hours multiplied by local rates, plus materials, then check them against market prices and real quotes. The new funding cap does not change that calculation directly. It could, however, change how busy installers are, and that is where you may feel it.
Here is what we would watch for:
- Longer waits. Record applications mean more demand for MCS-certified installers. Expect lead times to stretch if the trend continues.
- Less room to haggle. When installers are busy, discounts are harder to find. Treat a quote far below our range with caution, not as a bargain.
- Grant timing. The cap is on annual funding. We cannot say when, or whether, the pot will run short, and the source does not say either. If you want the grant, don't leave it open-ended.
Should you rush?
No, but don't drift either. A rushed heat pump decision can cost more than a missed deadline. A sensible approach:
- Get at least three quotes from MCS-certified installers.
- Ask each one to confirm in writing that the grant is deducted from the invoice and how VAT is treated.
- Put your quotes through our "is my quote fair" tool to compare them against the live range above.
- Ask about the heat loss survey and what radiator or pipework changes are included.
Insulation and solar can help the sums
A heat pump works best in a well-insulated home. If yours leaks heat, consider fabric first or alongside. External wall insulation at the default 150 m² size has a typical mid-range cost of £26,000, with a usual range of £20,300 – £33,800. See the External wall insulation for the detail. The 0% VAT rate on insulation also runs until 31 March 2027.
If you want to offset the electricity a heat pump uses, solar panels are the other option. A 6 kWp system has a typical mid-range cost of £12,600, and the Solar panels breaks down the battery choices.
The bottom line
The headline for homeowners is simple. Interest in heat pumps is at a record, the Budget has put a ceiling on grant funding, and the 0% VAT window closes on 31 March 2027. If you are serious about switching, start collecting quotes now, compare them with our live figures, and decide on your own timetable rather than a panicked one.
We will update our figures as the cost model changes.