Air Source Heat Pumps for Landlords: Cost, Grants & EPC Impact

What Is an Air Source Heat Pump?

An air source heat pump (ASHP) extracts heat from outside air — even in cold weather — and uses it to heat your property and hot water. It works like a refrigerator in reverse. A well-installed ASHP typically delivers 2.5–3.5 units of heat for every unit of electricity it consumes.

For EPC purposes, heat pumps are rated very favourably under both the current RDSAP and the upcoming HEM methodology. They deliver the largest SAP improvement of any heating system change.

How Much Does It Cost?

The Boiler Upgrade Scheme grant of £7,500 makes heat pumps significantly more affordable. For smaller properties or straightforward installations, the net cost after the grant can be under £2,000.

EPC and SAP Impact

An air source heat pump typically adds 10–20 SAP points — the largest single-measure improvement available. For a Band D property, this alone can push you well into Band C or even Band B territory.

Under the upcoming HEM methodology (delayed to late 2027), heat pumps will score even more favourably because the new system weights carbon emissions more heavily. A heat pump future-proofs your property against methodology changes.

Is Your Property Suitable?

Heat pumps work best in well-insulated properties. Key requirements:

Essential:

• Space for an outdoor unit (roughly the size of a large suitcase)
• Space for a hot water cylinder inside the property
• Adequate electrical supply (may need an upgrade)
• MCS-certified installer

Ideal (but not always required):

• Existing insulation (loft and walls) to reduce heat demand
• Larger radiators or underfloor heating (heat pumps run at lower temperatures)
• Off-gas grid properties (strongest financial case)

Potential issues:

• Terraced houses with no side access (unit placement challenges)
• Flats (usually not suitable unless ground-floor with outdoor access)
• Properties with very poor insulation (heat pump will struggle and electricity costs will be high)

The general advice is insulate first, then install a heat pump. If your property needs cavity wall or loft insulation, do that before the heat pump to get the best performance and lowest running costs.

The Boiler Upgrade Scheme (BUS)

The BUS provides a £7,500 grant toward the cost of an air source heat pump. Key conditions:

• The property must be in England or Wales
• You must have a valid EPC (not older than 10 years)
• The installer must be MCS-certified
• The existing heating system must be fossil fuel (gas, oil, LPG) or electric
• One grant per property
• The property does not need to be owner-occupied — landlords are eligible

Apply through your MCS installer — they handle the voucher process. The scheme is currently funded until 2028.

Running Costs vs Gas Boiler

At current energy prices (electricity ~24p/kWh, gas ~6p/kWh), an efficient heat pump with a coefficient of performance (COP) of 3.0 costs roughly the same to run as a gas boiler. In well-insulated properties, it can be cheaper.

For off-gas-grid properties currently using oil or LPG, a heat pump is almost always cheaper to run.

Running costs are a key consideration for tenant satisfaction. If the heat pump is properly installed and the property is well insulated, tenants should see no increase in heating costs.

MEES 2030 and HEM Considerations

Installing a heat pump now under the current RDSAP methodology gives the maximum SAP benefit and locks in Band C compliance for 10 years. Under the new HEM methodology (delayed to late 2027), heat pumps will meet the Heating System Metric automatically, making one of the two compliance pathways straightforward.

For landlords thinking long-term, a heat pump is the strongest future-proof option.

Check your property on EPCFix to see how a heat pump would affect your EPC rating and whether it's the most cost-effective option compared to other improvements.