Heat pump cost for landlords: what you actually pay

The short answer on heat pump cost

The Energy Saving Trust says an air source heat pump costs around £12,000 before grant, on a page it updated on 23 September 2026. That is a typical figure for a house, not a quote. For a landlord the number that matters is what is left after the Boiler Upgrade Scheme (BUS) grant and the VAT position, and what that net figure means against the rules that are planned for rented homes.

A second reference point comes from the grant statistics. DESNZ reports a median installed cost of £12,908 for BUS-funded air-to-water heat pumps in 2026 Q2, and that figure includes the grant value. Two independent sources, both near £12,000 to £13,000, is a fair guide to where a typical house sits. Individual jobs land above and below it.

This guide uses those two figures and no others. If you see a narrower range quoted elsewhere, ask where it comes from.

What a landlord pays after the grant

Subtract the grant from the gross price. The grant is £7,500 for an air-to-water or ground source heat pump in a home with a mains gas connection.

Starting price	Source	After £7,500 grant	After £9,000 grant
£12,000	Energy Saving Trust typical price	£4,500	£3,000
£12,908	DESNZ median, 2026 Q2	£5,408	£3,908

The £9,000 column applies only where oil or LPG heating is being replaced and there is no mains gas connection. It is £7,500 plus £1,500, available from 21 July 2026 to 31 March 2027. Mains gas homes get £7,500.

The installer applies for the grant on the owner’s behalf, so the grant normally appears as a deduction on the invoice, not as cash you claim afterwards. Landlords are eligible: you must own the property you are applying for, including a property you rent out. One grant is available per property, hybrids are excluded, and a property that has already had government funding for a heat pump or biomass boiler is excluded. The full rules are on the Boiler Upgrade Scheme for landlords page.

What drives the price in a rented house

Three things move a quote more than anything else: how much heat the house needs, what emitters it already has, and what has to happen to hot water. A rented terrace and a rented detached house can be £5,000 apart before anyone argues about brands.

Cost driver	Why it matters	Usually pushes the price
Heat loss of the property	Sets the size of the heat pump. Solid walls, poor loft insulation and single glazing mean a bigger unit	Up with heat loss
Existing radiators	Heat pumps run at lower flow temperatures, so small radiators may need replacing with larger ones	Up if replaced
Hot water cylinder	Most systems need a cylinder. A house with a combi boiler has none, so one must be added and space found for it	Up if added
Pipework	Old or undersized pipes may need replacing so water can circulate at the lower temperature	Up if replaced
Electrical supply	A larger consumer unit, a dedicated circuit or a supply upgrade may be needed	Up if needed
Outdoor unit position	Distance from the house, a wall mount, a stand, or a route for pipework	Slightly up
Flat versus house	Flats have less heat demand but often no outside space for a unit and tighter rules on location	Mixed
Property type of the rental	An HMO or a house split into units may need more than one system	Up

In a flat the outdoor unit can be the hard part, not the price. Planning limits apply to the unit’s position and size, and a lease or freeholder consent can come into it. See heat pumps for flats.

What is not in the quote

A headline price for the heat pump can leave out work that the house needs. Ask for each of these as a separate line, not as “allowances”:

• Radiator upgrades, including new valves
• A hot water cylinder and the space or cupboard alterations to fit it
• Consumer unit or electrical supply upgrades
• Pipework replacement or flushing
• Making good and redecorating after pipework runs
• Any controls, smart or otherwise, that the tenant will actually use
• VAT, if prices are shown without it

If two quotes differ by £2,000, the difference is very often a line that one of them left out. Compare like for like before you compare totals.

VAT: a dated window

Installing a heat pump in a home is zero rated for VAT until 31 March 2027, then 5% from 1 April 2027 (HMRC VAT Notice 708/6). The arithmetic of the change is simple. On a price of £10,000 before VAT, 5% is £500. On a price of £12,000 before VAT, 5% is £600. Whether a given quote includes VAT is something to confirm with the firm, because it moves the comparison.

This is a real date, not a reason to rush. A system chosen badly in March is a worse deal than a good one chosen in May with 5% added.

Worked example (modelled, not a real project)

This is an illustration built from the published figures. It is not a record of any landlord or any job.

Assumptions

• A three-bedroom semi-detached rented house on mains gas
• Gross price of £12,000, the Energy Saving Trust typical figure
• BUS grant of £7,500
• Heat demand of 12,000kWh a year, the model figure this guide uses
• Seasonal efficiency (SCOP) of 3.5, which the model treats as a good result
• Ofgem price cap from 1 October to 31 December 2026: electricity 26.32p per kWh, gas 7.97p per kWh
• Gas boiler efficiency of 90%

Step 1, landlord’s net outlay

£12,000 minus £7,500 = £4,500.

Step 2, tenant’s annual heating cost, gas boiler

12,000 ÷ 0.9 = 13,333.33 kWh of gas. 13,333.33 × £0.0797 = £1,062.67.

Step 3, tenant’s annual heating cost, heat pump

12,000 ÷ 3.5 = 3,428.57 kWh of electricity. 3,428.57 × £0.2632 = £902.40.

Step 4, the difference

£1,062.67 minus £902.40 = £160.27 a year in the tenant’s favour, before standing charges. At SCOP 3.0 the heat pump costs £1,052.80, a gap of £9.87. At SCOP 2.5 it costs £1,263.36, which is £200.69 more than gas.

Who gets that saving? The tenant, if they pay the energy bills. The landlord’s £4,500 does not earn a return from the tenant’s bill. The benefits that reach the landlord are indirect: a home that is more likely to meet a future EPC C requirement, and one that is less likely to be left empty. Those are reasoning, not measured outcomes.

How the net cost sits against the planned £10,000 cap

Today’s law is a minimum of EPC E, with a cost cap of £3,500 including VAT. The government has set out a plan for EPC C by 1 October 2030 and a cap of £10,000 per property, with spend counting from 1 October 2025. The regulations have not been laid, and a statutory instrument is expected in 2027. Everything below is planned, not law.

On the typical price:

• Gross £12,000 is £2,000 over a £10,000 cap
• Net of the £7,500 grant, £4,500 is 45% of the cap, leaving £5,500 of headroom

If BUS funding does not count towards the cap, which one summary of the government response reports, then your own spend on the heat pump is the net £4,500. If that reading were wrong, a gross £12,000 would use the whole cap on one measure. Either way, the cap is a ceiling on what a landlord must spend, not a budget to aim at. Read the cost cap and exemptions guide for how a 10-year exemption would work after cap spend.

Cheaper ways to reach EPC C

A heat pump is one route to EPC C, and for some homes it is the most expensive. The planned standard looks at the fabric of the building first and then lets the landlord choose a heating-system standard or a smart-readiness standard. That order tells you where to look first.

• Loft insulation, where the loft is thinly insulated or not insulated
• Cavity wall insulation, where the walls are cavity and unfilled
• Draught-proofing and glazing, which are cheap or expensive depending on what is there
• Controls and a modern condensing boiler, which can improve a rating but do not meet a low-carbon heating goal

If the property is already EPC D with a loft that needs topping up, a heat pump may be the wrong first spend. If it is EPC E with solid walls and an old boiler, the answer may be both, in sequence. The guide to heat pumps and EPC ratings covers what a heat pump does to the number.

When a heat pump is NOT the right spend

A heat pump is the wrong answer when the house leaks heat and nobody has fixed it, because the unit will be oversized and the tenant’s bills will be high. It is also the wrong answer where there is no space for a cylinder or an outdoor unit, where the tenancy is short and the property is about to be sold, or where a cheaper fabric fix reaches EPC C on its own. Do the cost comparison against the alternative, not against nothing.

Next step: run your own numbers in the landlord calculator, or send an enquiry and relevant independent firms contact you, at no charge and with no obligation.