Air Source Heat Pumps in London: Costs, Grants and What to Expect

An air source heat pump extracts heat from the outside air and upgrades it to a higher temperature for space heating and domestic hot water, using electricity. The efficiency of a heat pump is measured by its Coefficient of Performance (COP) or its Seasonal COP (SCOP) — the ratio of heat output to electricity input. A COP of 3 means the heat pump produces 3 units of heat for every 1 unit of electricity consumed — three times more efficient than a direct electric heater. Typical SCOP for a modern ASHP in a UK climate: 2.5-4.0 (varies with outdoor temperature and the temperature of the heating distribution system). The critical point about heat pumps and running costs: a heat pump running on electricity at 28p/kWh (the current UK energy price cap electricity rate) and delivering a SCOP of 3.0 produces heat at approximately 9.3p/kWh (28 ÷ 3). Gas at 7.4p/kWh (current energy price cap gas rate) is still cheaper per unit of heat — but the gas price has historically been much more volatile and is expected to rise, while electricity generated from renewables is expected to fall in real terms. Why insulation is critical: heat pump efficiency falls significantly when the heating distribution system operates at high temperatures. A poorly insulated house needs very hot radiators to heat the space — requiring the heat pump to work at a higher output temperature, reducing its COP. For a London Victorian terrace with uninsulated solid walls and single-glazed windows, the heating demand and the required radiator temperature is far too high for a heat pump to operate efficiently. Improving insulation before or alongside a heat pump installation is essential for good performance.

The suitability of an ASHP for a London Victorian terrace depends primarily on three factors: 1. Insulation standard: a well-insulated London Victorian terrace (with internal or external wall insulation, top-up loft insulation, and double or secondary glazing) can typically achieve the low heat losses needed for a heat pump to operate efficiently at 45-50°C flow temperature. A poorly insulated Victorian terrace (uninsulated solid walls, single glazing, poor loft insulation) will have heat losses that require high-temperature heating — making an ASHP inefficient and expensive to run. Before installing an ASHP in a London Victorian property, commission an energy assessment (from an accredited assessor, not the installer) to assess the property's heat loss and the improvements needed. 2. Radiator sizing: most Victorian London properties have undersized radiators for heat pump operation. Heat pumps work most efficiently at low flow temperatures (35-45°C) rather than the 70-80°C of a conventional gas boiler system. At 45°C flow temperature, a radiator delivers approximately 40% of its rated output compared to 80°C. This means the existing radiators in a Victorian terrace will be inadequate for the heat load at heat pump flow temperatures — they will need to be upsized (typically by 2-3x in surface area) for the heat pump to maintain comfort. Radiator replacement cost (per room, supply and fit): £200-£600. Full house radiator replacement for a 3-bedroom London terrace (8-10 radiators): £2,000-£5,000. 3. Hot water cylinder: a conventional gas combi boiler provides hot water on demand without a cylinder. An ASHP system requires a hot water cylinder (thermal store) to store hot water produced when the heat pump is running. Cylinder cost (supply): £600-£1,500 for a quality indirect unvented cylinder (180-250 litres). Fitting: £300-£600. If the property currently has a combi boiler and no cylinder, space for a hot water cylinder must be found.

Cost components for a full ASHP installation in a London Victorian terrace: ASHP unit (outdoor unit): a 7-12 kW ASHP for a 3-bedroom London terrace: £2,000-£5,000 supply (varies by brand — Mitsubishi Ecodan, Vaillant Arotherm, Nibe, Daikin, and Samsung are leading brands in the UK residential market). Installation of the outdoor unit: £1,000-£2,000. Location: the outdoor unit requires a clear space outside the property (typically in the rear garden or on the front of the house, subject to permitted development rules). It produces some noise (comparable to a standard air conditioning unit). Hot water cylinder and pipework connections: £1,200-£2,500 for a quality unvented cylinder plus fitting. Radiator upsizing (if required): £2,000-£5,000 for a full house. Electrical upgrade: an ASHP requires a dedicated 3-phase or single-phase supply. The property's existing consumer unit may need upgrading to accommodate the additional load. Electrical works: £500-£1,500. Controls and smart thermostat: £200-£500. Total installation cost without Boiler Upgrade Scheme grant: £6,000-£15,000 depending on whether radiators need upsizing and whether any other system upgrades are required. With the Boiler Upgrade Scheme grant: £6,000 grant (2024-2025). Net cost after grant: £0-£9,000 depending on the scope of works.

The Boiler Upgrade Scheme (BUS) is the main government incentive for replacing gas boilers with heat pumps in England: Grant value: £7,500 for an air source heat pump (increased from £5,000 in October 2023, then to £7,500 in 2024). How it works: the homeowner does not claim the grant directly — the Ofgem-registered heat pump installer claims the grant from Ofgem on the homeowner's behalf and passes it on as a discount on the installation price. Eligibility: the property must be in England (or Wales — separate scheme in Scotland); the heat pump must replace an existing fossil fuel heating system (gas, oil, or LPG); the installer must be MCS-certified (Microgeneration Certification Scheme) — this is a specific accreditation for heat pump installers. Budget and availability: the BUS has a finite budget — there have been periods of high demand that have temporarily exhausted the scheme. Check the government's BUS information page or speak to an MCS-registered installer for current availability. In addition to BUS: some London boroughs have supplementary local funding for low-income households (check your borough's website). The Great British Insulation Scheme (GBIS) and ECO4 can fund insulation improvements alongside the heat pump installation.

ASHPs are permitted development in most London residential properties — no planning permission required — subject to conditions: The unit must be in the rear or side of the property (not on the front elevation facing the highway). The unit must not be on a roof. The unit must not project higher than the roofline. The unit must be at least 1m from the edge of the flat roof (if installed on a flat roof — permitted only if it is not the principal elevation). Only one ASHP per property is permitted under PD. Noise output: the unit must meet a noise standard (no more than 45dB at 1m distance, assessed with the standard reference point). The unit must be installed by an MCS-certified installer. Conservation areas: an ASHP visible from the highway in a conservation area is NOT permitted development — it requires planning permission. For an ASHP on the rear elevation (not visible from the highway) of a property in a conservation area: permitted development applies as normal. Listed buildings: permitted development rights do not apply to listed buildings. An ASHP on a listed building requires planning permission and possibly listed building consent.