How Much Does a Heat Pump Cost? Installation, Running Costs and Grants in 2026

An air source heat pump costs around £13,000 to install before grants, based on the median price recorded under the Boiler Upgrade Scheme in 2025/26. The £7,500 grant brings a typical job down to about £5,500, and oil or LPG homes off mains gas can get £9,000, leaving about £4,000. To run, a heat pump heating a home that needs 10,000 kWh of heat a year costs roughly £660 to £940 at the October to December 2026 price cap, against about £890 for gas and £1,280 for oil.

We fit air source heat pumps as MCS certified installers across Hinckley, Leicester, Nuneaton, Coventry, Rugby and Tamworth, and we still install gas and oil boilers too. The figures below are the ones we’d want in front of us if we were weighing up the switch for our own homes.

How Much Does an Air Source Heat Pump Cost to Install?

Most homes pay somewhere near £13,000 before grants. Across all air source installations funded by the Boiler Upgrade Scheme, the median price was £13,041 in 2025/26, barely changed on the year before and roughly 11% lower than when the scheme opened in 2022. That figure takes in the heat pump, the labour and any upgrades carried out on the same job.

Plenty of quotes land either side of that median. A well-insulated semi in Hinckley with decent-sized radiators will usually come in under it, while a large older farmhouse near Market Bosworth that needs a bigger unit, a new cylinder and several new radiators will sit above it.

What Makes a Heat Pump Quote Higher or Lower?

The size of heat pump your home needs and the amount of work on the existing heating system make the biggest difference. Heat loss comes first, because a draughty, poorly insulated house needs a larger unit that costs more to buy and to run. Radiators come next. Heat pumps run at lower water temperatures than boilers, so some radiators may have to be swapped for larger ones to keep the room warm.

Combi boiler homes need a hot water cylinder adding, and an old vented cylinder usually has to be replaced with one designed for a heat pump. Narrow microbore pipe sometimes restricts the flow and needs upgrading. Then there’s the outdoor unit, where a short pipe run to a level spot beside the house keeps labour down and a long or awkward run adds to it. Some homes also need a consumer unit upgrade, and taking out an oil tank or disconnecting a gas meter adds a little more.

What Extra Work Might a Heat Pump Need?

Many installations need nothing beyond the heat pump, cylinder and controls. Where upgrades are needed, typical UK prices look like this:

Anything your home needs is itemised on our quote, so you can see exactly what you’re paying for and why.

How Much Does a Heat Pump Cost to Run?

At the current price cap, a heat pump in a home needing 10,000 kWh of heat a year costs roughly £660 to £940 to run. Where it falls in that range comes down to efficiency, measured as the seasonal performance factor (SPF, or SCOP on product sheets). An SPF of 3.5 means 3.5 units of heat for every unit of electricity over a full year, and every step up in that number takes money off the bill.

The table compares the same 10,000 kWh of heat from different systems at the Ofgem price cap for 1 October to 31 December 2026, which is 26.32p per kWh for electricity and 7.97p per kWh for gas. Oil is priced at the October 2026 UK average of about £1.19 a litre including VAT. Standing charges are left out.

We’ve left LPG out because the price depends so much on the supply contract, but per unit of heat it usually sits closer to oil than to mains gas. Oil itself has swung a long way this year. In June 2026 the UK average was nearer 90p a litre, which would have put the same oil bill at about £963.

Is a Heat Pump Cheaper to Run Than Gas, Oil or Electric Heating?

Against oil, LPG and direct electric heating, a well-installed heat pump is usually cheaper to run. Using the October 2026 prices above, a heat pump with an SPF of 3.5 costs about £527 a year less than oil for the same heat.

The gap with mains gas is far smaller and depends on how well the system performs. At an SPF of 3.5 the heat pump comes out about £134 a year cheaper, and at 2.8 it costs a little more than gas. If nothing else in the house runs on gas, closing the account also saves the 29.68p a day standing charge, which is roughly £108 a year.

Efficiency in real homes varies more than product sheets suggest. The government-funded Electrification of Heat trial found a median SPF of 2.80 across the air source heat pumps it monitored between 2020 and 2022, with the best systems doing considerably better. What separates them is design: sizing from a proper heat loss calculation, low flow temperatures and radiators that suit the heat pump. In the government’s 2026 evaluation of the Boiler Upgrade Scheme, 52% of households that replaced a gas boiler said their energy bills had gone down, and those on time-of-use or heat pump tariffs were more likely to report a saving.

How Can I Keep Heat Pump Running Costs Down?

Switching to a heat pump tariff is the quickest win. Several suppliers now sell electricity more cheaply at set times of day, and scheduling the cylinder and as much of the heating as possible into those windows cuts the bill noticeably.

After that, keep the flow temperature as low as comfort allows, ideally with weather compensation turning it up and down as the outside temperature changes. Leave the heat pump to hold a steady temperature rather than heating a cold house quickly twice a day, because that’s how it works most efficiently. Loft and cavity wall insulation are cheap ways to reduce the heat your home needs in the first place, and a yearly service keeps the coil clean and the system pressure where it should be.

What Grants Can I Get Towards a Heat Pump?

The Boiler Upgrade Scheme is the main one, taking £7,500 off an air source or ground source heat pump in England and Wales, or £9,000 in an oil or LPG home with no mains gas. We apply for it and deduct it from the quote, and our Boiler Upgrade Scheme guide covers eligibility and the application in full.

The Boiler Upgrade Scheme can’t be used on a heat pump that another government grant has already paid towards. Homes in Scotland go through Home Energy Scotland instead.

How Much Does a Heat Pump Cost to Maintain?

An annual air source heat pump service costs £150 to £300, and most of the homes we look after pay £180 to £250. Manufacturer warranties usually depend on a yearly service, so it belongs in your running costs from day one. Our article on heat pump service costs explains what moves the price, and our air source heat pump servicing page covers what we offer.

How Long Does a Heat Pump Take to Pay for Itself?

That depends mostly on what you’re replacing. The fair comparison is the extra cost of a heat pump over a new boiler, set against the difference in yearly running costs. Oil and LPG homes tend to recover the difference fastest, especially with the £9,000 grant. Gas homes take longer, and the result leans heavily on system efficiency and tariff. Your quote from us includes a running cost estimate worked out from your own heat loss survey rather than a national average, and if you’re off the gas grid our comparison of heat pumps and oil boilers goes into more depth.

For a fixed price, book a survey for air source heat pump installation and we’ll confirm your grant eligibility on the same visit.

Key Facts

• The median installed cost of an air source heat pump was £13,041 in 2025/26.
• The £7,500 Boiler Upgrade Scheme grant brings a typical job to about £5,500.
• Oil and LPG homes off mains gas can get £9,000 until 31 March 2027, bringing a typical job to about £4,000.
• Heating a home that needs 10,000 kWh a year costs about £660 to £940 with a heat pump at the October to December 2026 price cap.
• The same heat costs about £886 from a 90% efficient gas boiler and about £1,279 from an oil boiler at October 2026 oil prices.
• Heat pump installations have 0% VAT until 31 March 2027.
• An annual heat pump service costs £150 to £300.