Are heat pumps worth it for landlords?

The verdict in one paragraph

A heat pump is worth it for a landlord when the fuel being replaced is expensive or the property needs a long-term fix, and not worth it when it simply swaps a working gas boiler in a leaky house. The grant makes the upfront cost lower, and a future EPC C requirement makes the long-term case stronger. But at today’s prices the bill saving against mains gas is small or negative, and that matters because your tenant, not you, usually pays it.

That is a less comfortable answer than most trade sites give. It is also the one the arithmetic supports.

The break-even number against gas

The Ofgem price cap from 1 October to 31 December 2026 has electricity at 26.32p per kWh and gas at 7.97p per kWh. A gas boiler does not turn every unit of gas into heat, so we assume 90% efficiency. A heat pump delivers several units of heat for every unit of electricity, and the average over a year is the seasonal coefficient of performance, SCOP.

Cost of one kWh of heat from gas

7.97p ÷ 0.9 = 8.8556p

Cost of one kWh of heat from a heat pump

26.32p ÷ SCOP

Break-even

Set them equal: 26.32 ÷ SCOP = 8.8556. So SCOP = 26.32 ÷ 8.8556 = 2.972. Another way to write it: 26.32 × 0.9 ÷ 7.97 = 23.688 ÷ 7.97 = 2.972.

Above a SCOP of 2.97, the heat pump costs less to run than the gas boiler on unit rates. Below it, more. This guide’s model uses 3.0 as a cautious figure and 3.5 as a good one, so a cautious result only just clears the line and a good one clears it by a modest margin. At 3.5 the unit cost of heat is 26.32p ÷ 3.5 = 7.52p, against 8.86p for gas, which is about 15% lower. The prices will change at the next cap, and the break-even moves with them.

Decision table by property type and fuel

The table gives a direction, not a promise. It assumes a competent design and installation and an honest look at the insulation first.

Property and current heating	Running cost result	Usually worth considering?	The deciding factor
House, mains gas boiler	About break-even to slightly cheaper at SCOP 3.0 to 3.5	Only if the EPC goal or the grant justifies it	Insulation level, radiator sizes
Flat, mains gas boiler	Heat demand is low, so savings are small in pounds	Maybe, if the outdoor unit and consent are workable	Unit position, freeholder, planning
House, oil	Depends on your delivered oil price	Often yes, with £9,000 grant if no mains gas	Compare using the formula below
House, LPG	Depends on your delivered LPG price	Often yes, with £9,000 grant if no mains gas	LPG is usually the dearest per kWh
House or flat, direct electric	Much cheaper: a third of the electricity at SCOP 3.0	Usually yes	Wet system must be installed, cost of that
House, solid walls, not insulated	Higher demand, higher bills	Insulate first, then reassess	Fabric before heating
HMO or shared house	Larger loads, split bills or inclusive rent	Case by case	Who pays the bill

The £9,000 figure applies only where oil or LPG heating is replaced and there is no mains gas connection, between 21 July 2026 and 31 March 2027. The standard grant is £7,500.

Oil and LPG: do the sum with your own price

Delivered prices for oil and LPG are not capped by Ofgem and vary by supplier and season, so this guide does not quote one. Use this formula with the latest price on your invoice.

Break-even SCOP = 26.32 × boiler efficiency ÷ fuel price in pence per kWh.

If your fuel costs more per kWh than 7.97p, the break-even SCOP falls below 2.97 and the heat pump looks better. If it costs less, the reverse. Nobody should rely on an old price for this, so check a current delivery.

Direct electric heating: where the gain is largest

Direct electric heating, such as panel heaters or older storage heaters, gives one unit of heat for one unit of electricity. A heat pump at SCOP 3.0 gives three. The arithmetic, with an assumed 9,000 kWh a year of heat demand in a flat:

• Direct electric at 100% efficiency: 9,000 × £0.2632 = £2,368.80 a year
• Heat pump at SCOP 3.0: 9,000 ÷ 3.0 = 3,000 kWh × £0.2632 = £789.60 a year
• Heat pump at SCOP 3.5: 9,000 ÷ 3.5 = 2,571.43 kWh × £0.2632 = £676.80 a year

The annual difference is £1,579.20 at SCOP 3.0 and £1,692.00 at SCOP 3.5. That is a large saving for the tenant. The catch is that a flat with panel heaters has no wet heating system, so the cost of pipes, radiators and a cylinder is part of the bill, and an air-to-air system can be a cheaper route. See air-to-air heat pumps for rental properties.

What the grant changes and does not change

The Boiler Upgrade Scheme gives £7,500 towards an air-to-water or ground source heat pump, and you must own the property, including one you rent out. On the Energy Saving Trust typical price of around £12,000, that leaves £4,500 to pay. It does not change the running cost one penny. It also does not help if you choose a hybrid system, which is not funded. Read the cost guide for the net figures and what a quote leaves out.

The tenant’s bill

The tenant usually pays the energy bill, so a heat pump’s running cost is a cost they carry. If the system is poorly designed or the house is poorly insulated, you have moved a capital problem onto someone else’s household budget. That is a reputational risk, a complaint risk and, in a house with vulnerable tenants, an ethical one.

Two things reduce the risk. First, design to a low flow temperature with radiators sized for it. Second, give the tenant a short handover note and a clear way to use the controls. The running costs page lists what to include.

Resale and lettability: reasoning, not a statistic

This site has no measured data on whether a heat pump raises a rental’s value or speeds up letting, and it makes no such claim. The reasoning is simple. A home with a modern, low-carbon system and a good EPC is easier to explain to a buyer or a tenant, and avoids a forced upgrade later. The opposite also holds: a system the tenant finds hard to run and expensive can generate complaints and voids. The effect depends on the design, not on the label.

When it is NOT worth it

Skip the heat pump, or delay it, in these cases:

• The house is poorly insulated and nothing has been done about it. Fix the fabric first.
• A gas boiler is working and the property already clears today’s EPC E minimum, with no plan to hold the property to 2030.
• You cannot find room for a hot water cylinder or a legal position for the outdoor unit.
• The planned EPC C test could be met by cheaper measures such as insulation.
• The property is about to be sold or the tenancy is ending, and the buyer or tenant gains the bill risk.
• Your own cost sum shows a SCOP below the break-even for your fuel, and you have no other reason to proceed.
• A hybrid is what you want. Hybrids are not funded by the Boiler Upgrade Scheme.

None of these says heat pumps are bad. They say the choice should follow the property.

Why the dates matter, and why they are not a reason to rush

Today’s law is a minimum of EPC E. The government’s January 2026 response sets out a plan for EPC C by 1 October 2030, with a cost cap of £10,000 per property, but the regulations are not made yet and a statutory instrument is expected in 2027. VAT on installing a heat pump is 0% until 31 March 2027 and 5% from 1 April 2027. The £9,000 uplift for off-gas homes runs from 21 July 2026 to 31 March 2027. These dates are real, and they are inputs to a decision, not pressure to make one.

Next step: put your own property’s numbers into the landlord calculator, or send an enquiry and relevant independent firms contact you, at no charge and with no obligation.