Heat Pumps for London Homes: Air Source vs Ground Source, Boiler Upgrade Scheme, and What You Need to Know

Key Takeaways

• ✓A heat pump is a device that uses electrical energy to move heat from a lower temperature source (the outdoor air, for an air source heat pump; or the ground, for a ground source heat pump) to a higher temperature heat sink (the heating and hot water system within the building). The key performance metric for a heat pump is the Coefficient of Performance (COP) — the ratio of heat energy delivered to the building to the electrical energy consumed by the heat pump. A well-designed air source heat pump in a well-insulated London home might achieve a seasonal COP (averaged across the year) of 2.5–3.5 — meaning that for every 1 kWh of electricity consumed, the heat pump delivers 2.5–3.5 kWh of heat to the building. This compares with a modern gas condensing boiler at approximately 90% seasonal efficiency (0.9 kWh of heat delivered per 1 kWh of gas consumed, under realistic seasonal conditions). Whether this makes a heat pump cheaper to run than a gas boiler depends on the relative price of electricity and gas — at current UK energy prices (approximately 24–28p/kWh for electricity, 6–7p/kWh for gas), a heat pump with a seasonal COP of 3.0 has a running cost of approximately 8–9p per kWh of heat delivered, compared with 6.5–8p/kWh for gas — making the heat pump marginally more expensive to run at current prices, though this comparison changes significantly as gas prices increase or as the off-peak electricity tariff advantage from smart tariffs (such as Octopus Agile or Economy 7) is factored in
• ✓Air source heat pumps (ASHPs) are the most common type for London residential properties. An ASHP extracts heat from the outside air (even at temperatures as low as -15°C) via an outdoor unit (similar in appearance to an air conditioning condenser) and transfers it into the building via a refrigerant cycle and an indoor heat exchanger. The outdoor unit is installed outside the building (typically at the rear, on the ground or on a wall bracket) and must have clear air flow around it — it should not be enclosed in a tight recess or positioned where it will re-circulate its own exhaust air. Key ASHP installation considerations for London terraces: the outdoor unit requires adequate space at the rear (the unit is typically 800mm–1200mm wide, 800mm–1000mm deep, and 1000mm–1500mm tall); the outdoor unit generates some noise (typically 45–55 dB(A) at 1 metre, which is approximately the level of a quiet conversation), which must be considered in relation to the proximity to the property boundary and the neighbour's habitable rooms; the outdoor unit requires a solid, level mounting base; the refrigerant pipework and electrical connections are run between the outdoor unit and the indoor unit through a small penetration in the external wall. Ground source heat pumps (GSHPs) are more efficient than ASHPs (seasonal COP typically 3.5–4.5) but require either a borehole (80–150m deep, cost approximately £10,000–£20,000 per borehole) or a horizontal ground array (requiring approximately 200–400m² of garden land per 5–10kW of heating capacity), making them impractical for most London terrace gardens. GSHPs are more commonly installed in London detached houses with larger gardens or in new build projects where a borehole can be drilled during site preparation
• ✓The Boiler Upgrade Scheme (BUS) — launched by the UK Government in April 2022 — provides grant funding for homeowners replacing their existing gas, oil, or electric heating system with a low-carbon alternative. As of 2025, the grant levels are: £7,500 for an air source heat pump (ASHP); £7,500 for a ground source heat pump (GSHP). The grant is applied directly to the installation cost — the MCS-certified installer claims the grant from Ofgem and passes the reduction directly to the homeowner (the homeowner pays the net cost after grant deduction). Eligibility requirements for BUS: the property must be in England or Wales; the existing heating system must be a fossil fuel system (gas, oil, LPG) or a direct electric system that is being replaced (not supplemented); the heat pump must be installed by an MCS-certified installer (Microgeneration Certification Scheme — a quality assurance framework for low-carbon technology installers); the installation must be in accordance with the MCS heat pump standards; and the property must have a valid EPC (Energy Performance Certificate) that does not recommend loft insulation or cavity wall insulation as outstanding improvements — i.e., the basic fabric insulation must be in place before the grant is claimed. The BUS grant significantly reduces the upfront cost of heat pump installation — an ASHP with a list price of £3,000–£6,000 (supply only) plus installation costs of £4,000–£8,000 (total installed cost £8,000–£15,000 before grant) has a net cost to the homeowner of approximately £500–£7,500 after the £7,500 BUS grant
• ✓For a heat pump to perform efficiently in a London home, the home must be adequately insulated. Heat pumps operate most efficiently when the flow temperature (the temperature of the water circulated to the radiators) is as low as possible — a well-insulated modern home requires a flow temperature of 35–45°C to maintain comfortable internal temperatures, while a poorly insulated older home may require flow temperatures of 55–70°C. At lower flow temperatures, the heat pump's COP is significantly higher (the heat pump does less "work" to lift the refrigerant from outdoor temperature to the lower flow temperature). Most older London Victorian terraces, without significant insulation improvement, will require higher flow temperatures and will not achieve the COP values quoted in heat pump manufacturer marketing. Practical fabric improvement steps before heat pump installation: loft insulation to 270mm mineral wool (if not already present — cost approximately £300–£800); cavity wall insulation (only where the walls are cavity construction — most Victorian solid brick walls are not cavity construction and cavity wall insulation is not applicable); internal wall insulation or external wall insulation for solid brick walls (see the solid wall insulation guide — cost £10,000–£25,000 for a full house); floor insulation (ground floor solid or suspended timber); and replacement of any single-glazed windows with double or triple glazing. A thorough heat loss calculation (carried out by a heat pump installer or heat pump designer in accordance with BS EN 12831) should precede heat pump installation to confirm that the building fabric is adequate for the proposed heat pump specification
• ✓Existing radiators and heat pump compatibility: one of the most common concerns about heat pump installation in existing London homes is whether the existing radiators are large enough to work effectively at the lower flow temperatures required for efficient heat pump operation. In a standard gas boiler system, radiators are sized for flow temperatures of 70–80°C. At a heat pump flow temperature of 45°C, the same radiators will deliver significantly less heat output (approximately 50–60% of their rated output). For many rooms in a Victorian terrace, this means the existing radiators would be undersized for heat pump operation at 45°C — the heat pump would need to run at a higher flow temperature (reducing its efficiency) or the radiators would need to be replaced with larger low-temperature radiators. A room-by-room heat emitter sizing check (comparing the existing radiator output at the proposed heat pump flow temperature with the room heat loss calculated from the BS EN 12831 heat loss calculation) should be carried out as part of the heat pump design process. Underfloor heating (wet UFH) is inherently compatible with heat pump low flow temperatures (UFH typically operates at 35–45°C flow temperature) and is the ideal heat emitter for heat pump systems — either new UFH in an extension or refurbishment, or a retro-fit UFH system