The recent spike in energy bills means we are all more aware than ever when it comes to the cost of heating our homes.
For decades, the UK’s housing stock has been overwhelmingly heated by gas (or oil for off-grid customers), but global events and the drive to decarbonise our buildings with alternatives to fossil fuels means low-carbon heating systems such as heat pumps are now higher on the agenda than ever before.
There is certainly plenty happening right now in terms of incentives, so we thought we’d take a look at some of the help and offers available…
Boiler Upgrade Scheme
The UK Government’s Boiler Upgrade Scheme for England and Wales will cover £5,000 of the cost of an air source heat pump (£6,000 for ground source) or other low carbon options if you are replacing a fossil fuel-based system (oil, gas or electric). The grant has a fabric-first approach, so you must have an Energy Performance Certificate (EPC) less than 10 years old and have already addressed any EPC recommendations, such as insulation and double glazing. Households in Scotland can now apply for a grant of up to £7,500 (£9,000 for people living in rural areas) via Home Energy Scotland to install a heat pump and can decide whether to borrow additional funds as an interest-free loan. Previously, applicants needed to sign up for a loan before qualifying for this funding, but can now access the money directly.
Overview of incentives for low-carbon heating.
Zero VAT on installations
From 1 April 2022, for a period of five years, VAT has been abolished on the installation of domestic energy saving measures, including heat pumps. As well as cutting VAT from 5% to zero, the government has also simplified the rules about which types of heat pumps qualify. Previously, those used for cooling were not eligible for the reduced tax rate, but the only rule that applies now is that the installation must be capable of heating the home.
Greener Home Reward
Barclays Bank has introduced its Greener Home Reward, offering up to £2,000 cashback for mortgage customers. The scheme covers low carbon heating (air source, ground source or biomass pellet boiler) up to £2,000, solar energy (solar thermal for hot water, solar PV or solar battery storage) up to £1,000), solid wall insulation up to £1,000, other insulation (cavity wall, loft, underfloor etc) up to £500 and doors and windows up to £500. All work must be carried out by a TrustMark-registered business.
Green Living Reward
A pilot scheme operated by Octopus Energy and Lloyds Banking Group via the Halifax brand, the Green Living Reward allows customers using mortgage borrowing to switch to a heat pump can benefit from £1,000 cashback.
Green Mortgages
NatWest takes a different approach with its Green Mortgage offer, which rewards customers with a lower interest rate than standard if they purchase or re-mortgage a property with an EPC of A or B on a two or five-year fixed deal.
Summary
The benefits of a low-carbon heating system include no burning fossil fuels in your home, cleaner air and lower emissions. If you are replacing an oil-fired boiler, it also means no deliveries, no seasonal cost increases, and no smells! Upfront costs have long been a sticking point, but as more incentives become available, heat pumps will hopefully be within reach of many more potential customers’ homes.
