Storage heaters or a heat pump: which suits an electric-only rental?

The short answer

If the rental is heated only by electricity, a heat pump almost always wins on running cost, and modern storage heaters almost always win on upfront cost and simplicity. Which matters more depends on how long you will hold the property, how much heat it needs, and whether there is room for the equipment a heat pump brings.

Storage heaters convert electricity into heat one for one, store it in a heavy core, usually overnight, and release it during the day. A heat pump moves heat from the outside air into the home and delivers several units of heat for every unit of electricity, measured over a year as the seasonal coefficient of performance, or SCOP. The two systems use the same fuel, so the efficiency difference flows straight into your tenant’s bill.

Side by side

The table compares the three realistic options for an electric-only rental. It gives no installed price for storage heaters because this guide could not find one from an official source; get quotes.

	Modern or high heat retention storage heaters	Air-to-water heat pump	Air-to-air heat pump
Heat per unit of electricity	1	About 3 at SCOP 3.0	Depends on the unit’s rated performance
Hot water	Separate, usually an immersion heater	Yes, with a cylinder	No, keep the immersion heater
Boiler Upgrade Scheme grant	None	£7,500	£2,500
VAT on installation	Not on the zero-rate list	0% until 31 March 2027	0% until 31 March 2027
Typical installed cost	Get quotes	Around £12,000 before grant (EST)	Get quotes
Work involved	Electrician swaps heaters	Outdoor unit, pipes, radiators, cylinder	Outdoor unit and indoor units
Tariff fit	Off-peak tariff such as Economy 7	Single rate or time-of-use	Single rate or time-of-use
Planned heating metric (proposal)	Typically C or above if emissions beat direct electric	Always C and above	Heat pump, but no air-to-air specific text found

The VAT row comes from HMRC VAT Notice 708/6. Heat pumps are on the list of energy-saving materials installed at 0% until 31 March 2027, then 5% from 1 April 2027. Electric storage heaters are not on that zero-rate list. They appear only under the reduced rate for grant-funded heating for qualifying people, and the notice says installations paid for by contributions from landlords do not qualify. Ask the installer what rate they will charge.

Running cost: the sum your tenant pays

The running cost gap is the main reason to consider a heat pump in an electric-only home. The Ofgem price cap for 1 October to 31 December 2026 has electricity at 26.32p per kWh on a single-rate tariff, and electricity carries no VAT from 1 October 2026 to 31 March 2027.

The useful test is the price per kWh a storage heater would need to pay to match a heat pump. A heat pump at SCOP 3.0 on 26.32p delivers heat at 26.32 ÷ 3.0 = 8.77p per kWh. At SCOP 3.5 it is 26.32 ÷ 3.5 = 7.52p. So storage heaters only draw level if every unit they use costs about 8.77p or less, including any top-up taken at the day rate. Check the off-peak and peak rates on your tenant’s tariff against those figures.

The Energy Saving Trust notes that some storage heaters have a convector “boost” for when the stored heat runs out, and advises not relying on it too often, because for most people the electricity bought at cheaper overnight rates is the cheaper heat. That is where storage heater bills tend to creep up.

Worked example (modelled, not a real project)

Inputs, all stated:

• Assumed heat demand for a two-bedroom flat: 7,000 kWh a year (an assumption; measure your own where you can)
• Electricity at the Ofgem cap single rate: 26.32p per kWh
• Storage heaters at 100% efficiency at the point of use
• Heat pump SCOP of 3.0 (cautious) and 3.5 (good), the figures this site’s model uses
• Standing charges left out, because both options use an electricity supply

Results:

• Storage heaters, if all units were bought at 26.32p: 7,000 × £0.2632 = £1,842.40 a year
• Heat pump at SCOP 3.0: 7,000 ÷ 3.0 = 2,333.33 kWh × £0.2632 = £614.13 a year
• Heat pump at SCOP 3.5: 7,000 ÷ 3.5 = 2,000 kWh × £0.2632 = £526.40 a year

The storage heater line is the worst case. A tenant who buys most of the storage heater electricity at a cheap off-peak rate will pay much less than £1,842.40, so take the off-peak price from the actual tariff and repeat the sum. Even so, the heat pump only loses if that average price falls below the 8.77p break-even.

Tariffs: Economy 7, smart meters and time-of-use

Storage heaters are built around a two-rate tariff. Ofgem explains that on a multi-rate tariff such as Economy 7 you pay one unit rate at peak times and another at off-peak times, and you need a meter that records the two separately, either a dual-rate meter or a suitable smart meter.

One thing to check in older electric-heated rentals: Ofgem says support for radio teleswitch (RTS) meters has ended and that anyone still on one should contact their supplier to arrange a smart meter. If your property still has one, raise it with the tenant, since the tenant usually holds the electricity account.

A heat pump does not need an overnight tariff. The Energy Saving Trust says some households are better off on a smart time-of-use tariff, and that the tariff affects running cost. For a landlord, the point is practical: whichever system you choose, the tenant needs to know which tariff suits it. Put that in the handover note. The running costs guide has a checklist.

Grants: what each option can get

The Boiler Upgrade Scheme can replace electric storage heating. GOV.UK says the new system replaces fossil fuel heating “such as oil, gas, electric or LPG”, and Ofgem’s property owner guidance spells out that electric heating systems include storage heaters, electric panel radiators and electric boilers. Landlords are eligible because you must own the property you apply for, including one you rent out.

What you can get:

• £7,500 towards an air-to-water or ground source heat pump
• £2,500 towards an air-to-air heat pump that replaces existing heating
• one grant per property, applied for by an MCS certified installer on your behalf

The higher £9,000 does not apply to an electric-only home; it is only for properties heated by oil or LPG with no mains gas connection. Ofgem’s guidance also says the new system must completely replace the existing electric heating, though some components such as an immersion heater can be kept. Hybrids are not funded, and the scheme cannot replace an existing low-carbon system.

There is no Boiler Upgrade Scheme money for storage heaters. If the property may qualify for a council-run scheme, see the Warm Homes: Local Grant guide for its landlord rules, and check what measures your council funds.

The EPC: today and under the planned rules

Today’s law is a minimum of EPC E. The government’s January 2026 response plans EPC C by 1 October 2030, with a cost cap of £10,000 per property, but the regulations have not been made and a statutory instrument is expected in 2027.

The planned standard has two layers. A fabric performance standard comes first, and changing the heating does nothing for that layer. After it, the landlord chooses either a heating system standard or a smart readiness standard. The Home Energy Model consultation, which closed on 18 March 2026, proposed how the heating system metric would score:

• electric heat pumps would always score C and above
• direct electric heating with no, or not enough, thermal storage would always score D or below
• electric heating with thermal storage, where off-peak use gives lower annual emissions than direct electric, would typically score C or above

The same consultation lists thermal storage with smart functionality, including storage heaters, among the measures that count towards smart readiness. Read that as a direction of travel, not a rule: the scoring is a proposal and could change. The government response also says Boiler Upgrade Scheme funding will not count towards the £10,000 cap. For more, see do heat pumps improve an EPC rating.

Disruption and practicalities

Storage heaters are the lighter job, but not a trivial one. The Energy Saving Trust says a registered electrician should replace them, that some larger models weigh more than 150kg, and that the old heaters may need to be switched off for 24 hours or more beforehand so the core cools. It also warns that storage heaters installed before 1974 may contain asbestos and need a specialist contractor.

An air-to-water heat pump in a home with no wet heating is a bigger project: an outdoor unit, pipework to every room, radiators sized for a low flow temperature, and a hot water cylinder with somewhere to put it. Plan it for a void period if you can. An air-to-air system sits in between: an outdoor unit and wall-mounted indoor units, no cylinder, no radiators.

Both heat pump types need a legal position for the outdoor unit. In England, Class G permitted development allows one unit on a house that is not detached, two on a detached house, a compressor of up to 0.6 cubic metres on a block of flats, and a 37.0 dB(A) noise limit, with nothing on a pitched roof. Flats are the hard case; read heat pumps for rented flats.

When a heat pump is not the right answer

Modern storage heaters can be the better choice when:

• the property is small and well insulated, so the bill difference in pounds is modest
• there is no legal or practical position for an outdoor unit, or the freeholder will not consent
• you plan to sell within a few years and the heat pump cost would not be recovered
• a void period for wet heating works is not possible and air-to-air does not suit the layout
• the tenant is on a good off-peak tariff and happy with storage heating

And in every case, insulation and draught-proofing come first. The planned EPC rules put fabric ahead of heating, and a smaller heat demand makes any heating system cheaper to run.

Next step

Put your own heat demand and tariff into the landlord heat pump calculator to compare the options. If you want prices, send an enquiry and relevant independent firms contact you, with no charge to you and no obligation.