Ground-Source Heat Pumps (Commercial): Heat pumps for landlords

Why ground-source rewards landlords who hold buildings for the long term

Ground-source heat pumps are the technology a landlord chooses when the building is held for the long haul and runs all year. Instead of drawing heat from outside air, a ground-source system draws it from the stable temperature of the ground through a borehole array or horizontal loops, and because the ground stays at a steady temperature year-round its efficiency does not collapse in a cold snap the way an air-source unit's can. For an owner-occupied or long-let asset, that translates into the highest and most stable seasonal efficiency available, with an SCOP that is often 4.0 or higher across the whole year. That stability matters to a landlord because it makes running cost predictable in exactly the coldest weeks when an air-source system, and the tenant relying on it, is under the most strain.

The same system can also deliver low-cost passive or active cooling in summer by reversing the flow, which is valuable in offices, care homes, hotels and any demise that runs IT or process heat. For a landlord, that is one plant set covering both seasonal duties and improving the whole-life economics of the building. The trade-off is capital and time, and it is an honest one. Ground works raise the upfront cost and lengthen the programme. That is why ground-source earns its premium specifically on the buildings a landlord intends to keep and operate year-round, rather than on a unit that might change hands or use in a few years. Where you hold the freehold of a hospital, a care home, a hotel, a leisure centre or a campus building, the stable lifetime efficiency and the summer cooling can justify the deeper investment, particularly when grant funding meets the capital gap.

What a typical install looks like and how we size it

A commercial ground-source system usually sits in the 50 to 1,000 kW thermal range, served by a borehole array typically 100 to 200 metres deep or by horizontal ground loops where land allows. The ground or borehole field area varies hugely by site, so we never quote a standard footprint. A system in this range delivers in the region of 120,000 to 2,500,000 kWh of heat a year and saves between 22 and 450 tonnes of CO2 annually. Sizing is driven by peak heat-loss and the annual demand profile, established from a heat-loss survey and at least 12 months of gas or oil consumption.

Before the final design we recommend a ground investigation and a thermal response test so the array is sized to the real thermal conductivity of your ground rather than an assumption, because an undersized borehole field underperforms for the whole life of the system and an oversized one wastes capital. As with every heat-pump design, we keep the flow temperature as low as the emitters allow, because that is what protects the high SCOP that justifies the ground works in the first place. The ground array is the part of the system that earns the premium, so we design it conservatively against your real ground conditions, and we model the building's summer cooling demand alongside its winter heating demand so the single plant set is correctly sized for both duties rather than for heating alone.

Costs, payback and tax relief

Because of the drilling, a ground-source scheme typically runs £150,000 to £2,000,000 or more, with a longer simple payback in the region of 11 years before any grant. That payback shortens considerably where capital funding is available, which is why the funding route is central to the ground-source decision rather than a bonus. For a landlord paying UK corporation tax, the heat pump qualifies for full expensing, a 100% first-year deduction with no cap that is permanent from April 2026, worth up to 25p of tax saved per pound at the 25% rate, while unincorporated landlords use the Annual Investment Allowance.

Wiring and ancillary works may fall outside full expensing but typically qualify for the Annual Investment Allowance, so it is worth confirming treatment with your accountant. The boreholes themselves are a long-life asset: the field can last for decades, well beyond the life of the heat-pump units it serves, which spreads the heavy capital across an unusually long horizon and is part of why ground-source suits a long-hold landlord. The domestic Boiler Upgrade Scheme does not apply to commercial premises. Our cost guide models air-source and ground-source side by side so you can see the whole-life cost of each before deciding which is right for a given building.

Funding routes in detail

Ground-source projects are often the best fit for the larger grant routes precisely because they suit substantial year-round buildings. Public-sector landlords and occupiers, NHS trusts, schools, colleges, universities and local authorities can access the Public Sector Decarbonisation Scheme via Salix, which funds the additional cost over a like-for-like boiler replacement and can cover the bulk of capital on a qualifying scheme, with grants running from tens of thousands to several million pounds. A landlord developing a campus or multi-building scheme should look at the Green Heat Network Fund, which can meet up to 50% of eligible commercialisation and construction costs.

Private landlords rely on full expensing or the Annual Investment Allowance. We assess eligibility for each at feasibility and build the application around the project, because on a ground-source scheme the grant can be the difference between a marginal and a compelling business case. The grant windows are competitive and time-limited, projects must complete within the relevant phase deadline, and the application has to be evidenced properly, so engaging the funding question at the start of the design rather than the end is not an administrative nicety, it is what protects the economics of an expensive project.

Compliance and sector considerations

Ground-source carries the most demanding compliance of the heat-pump family. Borehole drilling requires Environment Agency awareness: an open-loop system that abstracts and discharges groundwater needs an abstraction and discharge permit, while a closed-loop system does not but must follow EA closed-loop guidance. The design should follow CIBSE TM51 ground-source guidance and MIS 3005 design principles, and systems up to 45 kW thermal need MCS certification or a recognised equivalent for most grant routes.

The general commercial set still applies: BS EN 14511 and BS EN 14825 performance ratings, the BS EN 378 safety and environmental standard, F-Gas certified refrigerant handling, and a DNO supply check, since a large heat pump adds significant electrical load and a supply upgrade can be the longest-lead item. Borehole arrays may also need planning permission depending on scale. For a landlord, the practical message is that ground-source has more permitting touchpoints than any other route, and they have to be sequenced correctly, because a missed Environment Agency permit or an unconfirmed supply upgrade can stall a six-figure project for months.

How we approach this kind of project

On a ground-source scheme the stakes are higher, so the diligence is deeper. We model running cost and carbon from your real 12-month consumption data and present air-source and ground-source side by side, so you are recommending the right system to your board on evidence rather than a preference. We commission ground investigation and a thermal response test before final design, size for self-consumption and a low flow temperature, and check emitters and pipework so you do not over-spend on re-emittering a building that can run at moderate flow temperatures.

We open the DNO conversation and submit any G99 grid application early, deal with the Environment Agency permitting where an open-loop design is in play, and deliver a fixed-price proposal specified to BS EN 14825 with an insurance-backed warranty. Because the ground works are the irreversible, expensive part of the project, we get them right before anything is committed, sizing the array to a measured ground condition rather than a rule of thumb. The borehole field itself can last for decades, which is part of why ground-source suits a long-hold landlord and why it deserves this level of care at the design stage.

We also coordinate the install around the building's occupants and operating calendar. Although the ground works are more involved than an air-source project, much of the drilling can often be carried out in a contained area of the site while the building keeps running, and we plan the live cutover so a demise is not left without heat. Where a landlord is comparing ground-source against air-source for a particular asset, the side-by-side whole-life model is what settles the decision: it weighs the higher capital and longer programme of ground-source against its higher, steadier SCOP, its summer free cooling and its very long-life borehole field, so the choice rests on the building's real economics over the period you intend to hold it rather than on the headline capital figure alone.

An illustrative example

As an illustrative composite, and not a real named client or project, consider a council-owned leisure centre with a swimming pool, sports hall and year-round hot-water and space-heating load on an end-of-life gas boiler. The design was a 450 kW ground-source heat pump on a borehole array, delivering heating in winter and summer cooling support for the sports hall. Modelled heat delivered was in the region of 1,050,000 kWh a year at an SCOP of about 4.1, an illustrative saving near £68,000 a year against the prior gas cost, with roughly 190 tonnes of CO2 saved annually.

In this composite the majority of capital was met by the Public Sector Decarbonisation Scheme grant rather than by the landlord, so a simple payback does not apply in the usual way. The stable year-round SCOP and the summer free cooling for the sports hall were the decisive benefits, and the scheme stood up as a best-practice example in the body's net-zero strategy. Every figure here is illustrative and depends on your building, ground conditions and tariff.

If a faster, lower-capital route suits part of your portfolio better, compare this with our commercial air-source heat pumps page and the hybrid boiler-replacement retrofit. When you are ready, read the cost guide and the funding routes, then request a feasibility or browse the heat pump FAQs.