Half of all air source heat pumps installed through the Boiler Upgrade Scheme in the April to June 2026 quarter cost between £11,128 and £15,627, according to government data on what households actually paid, and the median across 2025/26 was £13,021. The Boiler Upgrade Scheme takes £7,500 off that for most people, and £9,000 if you are off the gas grid replacing oil or LPG, which leaves a household paying the median around £5,500, or around £4,000 on the off-grid rate.
That’s the short answer. The longer answer is that the spread is enormous, the quote you get depends far more on your house than on the heat pump itself, and there are properties where the honest recommendation is not to bother. This page covers all three.
What the installation actually costs
What people actually paid, according to the government
Almost every cost guide you will read, including the one below, gives you a range based on quotes and estimates. There is a better source, and hardly anyone uses it.
Every heat pump installed through the Boiler Upgrade Scheme has its cost recorded when the grant is redeemed, and DESNZ publishes those figures. These are prices actually paid by real households, not quotes, not estimates, and not what an installer told a journalist.
| Measure | Air source | Ground source |
|---|---|---|
| Median installed cost, full year 2025/26 | £13,021 | £26,200 |
| Median after the £7,500 grant, full year 2025/26 | £5,521 | £18,700 |
| Median after the £9,000 off-grid rate, full year 2025/26 | £4,021 | £17,200 |
| Installations, full year 2025/26 | 30,590 | 367 |
| Middle half of installs, April to June 2026 quarter | £11,128 to £15,627 | £18,136 to £42,110 |
Three things worth drawing out of that.
- The median air source install is £13,021 before the grant, which is higher than the £8,000 to £15,000 range most sites quote and sits in the upper half of it. If you have been told to budget £9,000, the data says half of households paid more than £13,000.
- Half of all installs in the April to June 2026 quarter landed between £11,128 and £15,627. That is the most recent realistic planning range for an ordinary property. A quarter came in below it and a quarter above.
- Ground source is a different world. Across the same quarter the middle half spans £18,136 to £42,110, a spread of £24,000, because boreholes and ground conditions vary enormously. With only 367 installations across 2025/26 against 30,590 air source, it remains a niche choice.
The estimates below break the cost down by property type, which the official data does not do. Treat them as a guide to where in that range your house is likely to fall, rather than as prices in their own right.
Installed prices before grant, by property type:
| Property | System size | Installed cost | After £7,500 grant |
|---|---|---|---|
| Flat or small terrace, well insulated | 4-6 kW | £7,000-£9,500 | From around £500 |
| Three-bed semi | 6-10 kW | £9,000-£13,500 | £2,000-£6,000 |
| Four-bed detached or older stock | 8-14 kW | £11,000-£16,500 | £3,500-£9,000 |
If you’re off the mains gas grid and currently heated by oil or LPG, the grant rises to £9,000 until 31 March 2027. Take another £1,500 off the after-grant figures above.
Ground source is a different proposition entirely, at £20,000 to £30,000 installed, driven almost entirely by the cost of trenching or drilling boreholes. The same £7,500 grant applies, so the net cost is far higher. It only makes sense where you have the land and a long time horizon.
Air-to-air heat pumps, which heat through wall units rather than radiators, run £4,000 to £9,500. These became grant-eligible for the first time in April 2026, at £2,500.
Where the money goes
Roughly £3,500 to £6,000 of a typical quote is labour. The rest is hardware, and the hardware is not just the heat pump.
- The heat pump unit itself: £3,000 to £8,000 depending on output and brand
- Hot water cylinder: most homes need a new one, 200-300 litres, £800 to £1,800
- Radiator upgrades: the single most variable item. Heat pumps run at lower flow temperatures, so radiators sized for a boiler are often undersized. Budget £150 to £400 per radiator changed, and expect four to six in a typical retrofit
- Pipework: older microbore pipework often needs replacing, which can add £1,000 to £3,000
- Electrical work: a dedicated circuit, sometimes a consumer unit upgrade
- Survey and system design: should be included, and if it isn’t, that’s a warning sign
The radiator and pipework items are why two identical houses on the same street can get quotes £4,000 apart. It’s not the installer being greedy, it’s the house.
What you’ll pay after the grant
The Boiler Upgrade Scheme covers England and Wales. You don’t apply yourself. Your MCS-certified installer applies to Ofgem on your behalf and deducts the grant from the invoice, so you only ever see the reduced price.
Current grant values:
| System | Grant |
|---|---|
| Air source heat pump (air-to-water) | £7,500 |
| Ground source heat pump | £7,500 |
| Air source or ground source, off gas grid replacing oil or LPG | £9,000 (until 31 March 2027) |
| Air-to-air heat pump | £2,500 |
| Biomass boiler (rural, off gas grid only) | £5,000 |
Two things changed in April 2026 that matter. The requirement to have a valid EPC with no outstanding insulation recommendations was removed, which opened the scheme to a much wider group of homeowners and cut several weeks off the application. And air-to-air systems became eligible for the first time, which helps flats and homes with no wet central heating.
There’s no means test. Any homeowner in England or Wales can apply regardless of income. Our full guide to the Boiler Upgrade Scheme sets out the eligibility rules and the disqualifiers in detail.
The £9,000 rate is time-limited. It runs from 21 July 2026 to 31 March 2027 and applies only to homes off the mains gas grid currently heated by oil or LPG. Grant pots can also close early if the budget runs out, so if that’s your situation, this is not a decision to sit on.
Outside England and Wales: Home Energy Scotland offers up to £7,500, rising to £9,000 in rural and island areas, plus an interest-free loan. Wales has Nest, Northern Ireland has NISEP.
Running costs, honestly
This is where most guides get vague, so here are the actual numbers.
A typical three-bedroom house runs a heat pump for somewhere around £1,000 a year, with the realistic range from £855 to £1,700 depending on the property and the tariff.
But the comparison that matters is cost per unit of heat, not per unit of fuel, and this is where most comparisons go wrong. Under the price cap running from 1 October to 31 December 2026, electricity is around 26.32p per kWh and gas around 7.97p. A gas boiler is roughly 85% efficient, so a unit of heat from it actually costs 7.97 divided by 0.85, or about 9.4p.
A heat pump with a seasonal efficiency of 3.0 delivers heat at 26.32 divided by 3.0, or about 8.8p. So on current prices it comes out slightly ahead of gas, not behind it.
The margin is thin, though, and it cuts both ways. The break-even point is a real-world seasonal efficiency of about 2.8. Above that a heat pump is cheaper to run than gas. Below it, more expensive. Plenty of installed systems fall below it, usually because they were oversized, badly commissioned, or left running at a high flow temperature into radiators that were never upgraded.
Worth knowing that the current numbers flatter the comparison. VAT has been removed from household electricity between 1 October 2026 and 31 March 2027, which is why electricity held flat this quarter while gas rose nearly 9%. If VAT returns in April, electricity goes back to around 27.6p and the break-even figure rises to roughly 2.95.
You get further ahead in three situations:
- Better efficiency. A well-designed system in a reasonably insulated home achieves a seasonal figure of 3.2 to 3.6 in practice, which beats gas comfortably rather than narrowly
- A heat pump tariff. Several suppliers offer dedicated tariffs with cheaper windows through the day, and a heat pump paired with a cylinder can shift a good deal of its load into them
- You’re replacing oil, LPG or electric heating. Oil currently delivers heat at around 12.0p to 12.8p per kWh, so a heat pump wins comfortably. This is why off-gas-grid homes are the strongest case by a distance
If you’re on mains gas with a functioning boiler and a poorly insulated house, the running cost saving may be zero or negative. Anyone promising you large savings on a gas-to-heat-pump switch is selling rather than calculating.
Knowing the cost is only half the question. We work through whether a heat pump is actually worth it in full, including the arithmetic behind that break-even figure and the property types where the answer is no.
Payback
Payback is the wrong frame for most households, and it is worth understanding why before anyone quotes you a number.
If you are on mains gas, the running cost difference either way is small. A home using 10,000 kWh of heat a year might save in the region of £100, plus around £108 if the gas supply is removed entirely and the standing charge with it. Set that against a net installation cost anywhere from a few hundred pounds to £7,500 and the payback period ranges from a couple of years to never, depending almost entirely on what your house needed doing to it.
So the running cost saving is not the case for a heat pump in a gas-heated home. The real comparison is a replacement one. If your boiler has failed or is close to it, you are not choosing between a heat pump and nothing, you are choosing between a heat pump and a new gas boiler at £2,000 to £3,500. After the grant, those two figures often land in the same range.
Payback becomes a genuinely useful number in two cases:
- You’re off the gas grid. Against oil at 12.0p to 12.8p per kWh of heat, the annual saving is large enough for payback to mean something
- You’re on a heat pump tariff and can shift load. This widens the gap enough to be worth calculating
There is also the EPC question, which matters more for landlords facing minimum standards in the private rented sector than for owner-occupiers. A heat pump typically lifts a rating by one to three bands. There is no reliable evidence that it is recovered in sale price.
When a heat pump isn’t the answer
We’d rather say this than have you find out after spending £11,000.
Poor insulation with no plan to fix it. A heat pump in an uninsulated solid-wall house will struggle and cost a fortune to run. Insulate first, heat pump second. The Warm Homes Local Grant may fund the insulation.
No space for the outdoor unit. It needs a sensible external location with airflow and a run to the plant room. Flats and mid-terraces with no rear access are genuinely difficult.
A boiler with life left and mains gas. If your boiler is five years old and working, the financial case for replacing it now is weak. Nothing is forcing your hand. The proposed 2035 phase-out of gas boilers in existing homes was dropped from the Warm Homes Plan published in January 2026. It remains entirely legal to fit a replacement gas boiler in an existing home.
You’re moving within a few years. You won’t see the payback and the value uplift is uncertain.
What to check in a quote
- Is the installer MCS certified? Without this there is no grant, full stop
- Which MCS scheme are they on, and what financial protection is included? Installers on the redeveloped scheme provide MCS-approved financial protection; those still on the old one hold RECC or HIES membership. Our guide to choosing an MCS installer covers what to ask
- Has a room-by-room heat loss calculation been done? Not an estimate from floor area. If they haven’t been in every room with a tape measure, the system will be wrong
- Is the radiator schedule itemised? Vague “radiator upgrades as required” lines are where quotes balloon
- What flow temperature is the system designed around? Lower is more efficient. Anything designed at 55°C or above suggests the radiators are undersized
- Is the hot water cylinder included and sized correctly?
- What’s the predicted seasonal efficiency, and what’s it based on? Ask for a realistic figure in writing, not the datasheet number
- What’s the price before the grant? Compare quotes on that figure, since it’s the only one that tells you what the work is actually being priced at
A good installer will spend two hours in your house before quoting. One who quotes off a phone call is guessing.
Last updated 28 September 2026. Installed costs verified against DESNZ Boiler Upgrade Scheme Statistics, July 2026 release. Energy prices taken from the Ofgem price cap for 1 October to 31 December 2026. Grant values verified against Ofgem’s published scheme guidance. The cost estimates by property type are our own, not official figures. Prices change quarterly and the electricity VAT reduction is due to end on 31 March 2027, so check the date above before relying on the figures here.
Written by Ben Jardine. Ben is the editor of The Energy Upgrade and has been publishing online since 2014. He is not a heating engineer: this page sets out what the research and the official scheme rules actually say, and you should take advice from an MCS-certified installer before committing to an installation.