It is the first question everyone asks, and rightly so. A heat pump is a significant investment. The good news is that with the £7,500 government grant and 0% VAT, the actual cost to most homeowners is far lower than the headline figures suggest. Let us break it all down.
The Headline Numbers
A typical air source heat pump installation in 2026 costs between £10,000 and £16,000 before the grant. That is the full installed cost — the heat pump unit itself, the hot water cylinder, any pipework modifications, the outdoor unit installation, commissioning, and all the MCS paperwork.
After the £7,500 Boiler Upgrade Scheme grant (which we apply for on your behalf), most homeowners pay between £2,500 and £8,500. And because heat pump installations are currently VAT-free, there is no 20% to add on top.
What Affects the Price?
No two installations are the same. Here is what drives the cost up or down:
Property Size
A larger home needs a larger heat pump. A two-bedroom cottage might need a 5-7kW unit, while a four-bedroom detached house could need 12-16kW. The bigger the unit, the higher the cost — both for the heat pump itself and the associated pipework and cylinder.
Radiator Upgrades
Heat pumps run at lower flow temperatures than gas boilers. This is more efficient, but it means some radiators may need upsizing to deliver the same warmth. Not every home needs this — we assess every radiator during the survey. If you do need new radiators, expect to add £1,500–£3,000 depending on how many.
Hot Water Cylinder
Heat pumps need a hot water cylinder (they cannot produce instant hot water like a combi boiler). If you already have one, we may be able to reuse it. If you are coming from a combi boiler, a new cylinder will be needed. A good quality cylinder typically costs £800–£1,200 installed.
Pipework Complexity
A straightforward replacement — where the existing pipework routes work for the new system — is cheaper than an installation that needs significant re-routing. Older homes and period properties sometimes need more pipework work, but not always.
The Heat Pump Unit
We install units from leading manufacturers. Prices vary by brand and capacity, but the unit itself is typically £3,000–£6,000 of the total cost. We recommend the right unit for your home — we are not tied to one brand.
A Realistic Cost Example
Here is what a typical installation might look like for a three-bedroom semi-detached house in Hampshire:
| Item | Cost |
|---|---|
| 8kW air source heat pump | £4,200 |
| 210L hot water cylinder | £950 |
| Installation labour (3 days) | £3,200 |
| Pipework, fittings, controls | £1,800 |
| 3 replacement radiators | £1,350 |
| MCS certification & commissioning | £500 |
| Total before grant | £12,000 |
| BUS grant | -£7,500 |
| VAT | £0 |
| You pay | £4,500 |
That is a real-world example, not a best-case scenario. Some installations come in lower, some higher. You will know the exact figure before you commit.
The £7,500 Grant
The Boiler Upgrade Scheme provides £7,500 towards an air source heat pump installation. Most homeowners qualify — you need a valid EPC and the property must not be a new build. We handle the entire application. You get a confirmation email from Ofgem and the grant is deducted from your bill. You never have to pay it upfront and claim it back.
0% VAT
Heat pump installations are currently zero-rated for VAT. On a £12,000 installation, that is a saving of £2,400 compared to the standard 20% rate. This relief is in place until at least 2027.
What About Running Costs?
The upfront cost is only half the picture. Heat pumps are around 300% efficient — for every 1kW of electricity they use, they produce roughly 3kW of heat. That makes them significantly cheaper to run than gas, oil, or LPG.
For a typical three-bedroom house, expect annual running costs of around £800–£1,100. Compare that to £1,400–£1,800 for gas or £1,800–£2,400 for oil. Over the 20+ year lifespan of a heat pump, those savings add up to thousands.
Finance Options
We understand that even after the grant, the remaining cost is not small change. We can discuss finance options during your survey. Some homeowners spread the cost over 3–5 years, making the monthly payments comparable to — or even less than — the energy savings.
Get an Exact Quote
Online estimates are useful, but every home is different. The only way to know what your installation will cost is a proper survey. Ours is free, takes about an hour, and comes with no obligation. We will give you an exact price — not a range — and explain every line item.
Want to know exactly what a heat pump would cost for your home?
Book a free home survey. We will visit, assess your property, and give you a fixed quote — including the £7,500 grant.
Get instant estimate