Heat Pump Costs Made Simple: What Homeowners Need to Know

Heat pump cost calculator

You can use a heat pump cost calculator to get a quick idea of installation prices for low-carbon heating and renewable heat.

• Enter your home details

• Select system type

• View estimated costs

This helps you plan your budget before speaking with installers.

How much does a heat pump cost?

When you look into heat pumps, the cost depends on the type you choose, the size of your home, and how complex the installation is. Each type—air source, ground source, or water source—comes with different price ranges, efficiency levels, and installation challenges. Below, you’ll find a breakdown of what you can expect to pay, along with grants and possible savings.

Cost of air source heat pumps

Air source heat pumps are usually the most affordable option for UK homes. On average, you can expect to pay around £10,000 for a three-bedroom property, including installation. The size of your home plays a big role in the final price, as larger spaces need higher-capacity systems.

Without installation, the heat pump unit itself often costs between £5,000 and £7,000. This means that nearly half of the total cost goes towards fitting and set-up.

Here’s a rough guide to typical costs based on property size:

Air source heat pumps are less efficient than ground source systems, because outside air temperatures change throughout the year. This can affect performance in colder months, but they remain a popular choice due to their lower upfront costs and simpler installation.

Cost of ground source heat pumps

Ground source heat pumps are more expensive, but they offer higher efficiency. This is because underground temperatures remain steady all year, which makes them reliable for heating.

However, the installation process is more complex. You’ll need trenches or boreholes for the underground pipework, which increases labour and equipment costs. A typical horizontal system costs about £24,000, but this can rise depending on the size of your home and the type of groundworks required.

Here’s a guide to ground source heat pump costs in different home sizes:

While the upfront price is high, ground source heat pumps usually last longer and deliver consistent efficiency. They’re often better suited to larger properties with outdoor space for digging trenches or drilling boreholes.

Cost of water source heat pumps

Water source heat pumps are less common, but they can be a good choice if you live near a suitable water supply such as a lake, river, or pond. Their cost varies widely, depending on the set-up and any upgrades needed in your home.

The basic installation usually falls between £6,000 and £11,000. However, you may need extra work such as new pipework, larger radiators, or improved insulation. These upgrades can add anywhere from £500 to £40,000, depending on what your property requires.

Because of these potential extras, water source heat pumps can be unpredictable in terms of cost. They are most economical when your home already has modern heating infrastructure and good insulation.

Financial help for heat pumps in the UK

The UK government offers support to help with the upfront cost of installing a heat pump. The main scheme is the Boiler Upgrade Scheme (BUS), which provides up to £7,500 towards an air source or ground source heat pump. Importantly, you no longer need loft or wall insulation to qualify, making the grant easier to access.

With this support, the cost of an air source heat pump for a three-bedroom house could fall to around £2,500–£3,000 out of pocket. Some energy companies, such as British Gas and Octopus Energy, also run their own offers that combine the BUS grant with discounts, allowing you to get a system at a much lower price.

Other providers, like Aira, have introduced monthly payment plans. After applying the BUS grant, an Aira heat pump for a medium-size home can cost between £4,000 and £7,000, and comes with a 15-year guarantee and service warranty.

This combination of government and private schemes makes heat pumps more affordable than they first appear.

Can heat pumps reduce your energy bills?

One of the biggest advantages of heat pumps is their efficiency. A good air source or ground source system can be 300% efficient, meaning it produces three units of heat for every unit of electricity used.

Over a 20-year period, this efficiency can save the average household about £4,100 compared to a gas boiler. If you live in a well-insulated home and install a high-performing system (rated 350% or higher), savings could reach around £8,000 over 20 years.

Heat pumps also have a longer lifespan than gas boilers. While a boiler often needs replacing after 10 years, a heat pump can last for 20 years or more with proper care.

Here are some key points to consider:

• Insulation matters: A poorly insulated home will waste energy and reduce your savings.

• Energy prices: As electricity costs fall and gas prices rise, heat pumps are becoming more economical.

• Solar panels: If you combine a heat pump with solar panels, you can cut your bills further.

To give you an idea of real-world savings, one Octopus Energy customer reported paying £170.95 for four weeks of heating, hot water, EV charging, and battery charging. This worked out to about £43.75 per week for all energy needs. With solar panels, the costs dropped even further in warmer months.

While air source heat pumps are generally cost-effective for most homes, ground source heat pumps may not always be financially worthwhile for smaller domestic properties due to their high upfront costs and space requirements.

By understanding the different costs, grants, and savings, you can decide which type of heat pump best suits your home and budget. Heat pumps are not only an investment in lower energy bills but also in a more sustainable way of heating your home.

Heat pump installation costs

When planning a heat pump installation, the price depends on the type of system, the size of your home, and the work needed to make it run efficiently. Air source heat pumps are usually the most affordable option, while ground source systems can be much more expensive due to the extra labour and equipment involved.

Typical installation costs:

If you choose a ground source system, the layout of your land matters. A horizontal setup needs around 700m² of outdoor space for the underground loops. Without that space, you’ll need vertical boreholes, which add a significant cost but allow installation in smaller gardens.

You may also need to budget for electrical upgrades if your current system cannot handle the new equipment. In many homes, the installer will also recommend replacing about a third of your radiators with larger models. This is because heat pumps release warmth more slowly than gas boilers, so you need bigger radiators or strong insulation to keep your rooms comfortable.

The installation itself is not a DIY project. A qualified installer must carry out the work, as it involves specialist tools and knowledge. Choosing an experienced professional ensures your system runs efficiently and avoids costly mistakes later.

To get an accurate figure for your home, it’s best to request a tailored heat pump quote. Installers will consider your property size, insulation levels, and any extra work needed before giving you a price. Many companies now offer free quotes, so you can compare options before making a decision.

By understanding the different costs and requirements, you can plan your budget more effectively and choose the right system for your home.

Heat pump running costs

When you compare a heat pump with a gas boiler, the monthly bills may look slightly higher at first. This is mainly because electricity costs more per unit than gas. However, a heat pump uses far less energy to produce the same amount of heat, so the gap is smaller than you might expect.

For an average three-bedroom home, a ground source heat pump often costs around £939 per year to run. An air source heat pump usually falls in a similar range, though your exact costs depend on where you live and how cold the winters are in your region.

By contrast, a gas boiler in the same type of home is about £853 per year. That makes it a little cheaper at the moment, but this balance may change. Gas prices are expected to rise over time, while electricity could become cheaper, especially if government policy reduces levies on electricity bills.

The table below shows an example comparison of monthly costs:

Your location also makes a difference. If you live in the south of the UK, you may already find that a heat pump is cheaper to run than a boiler because the climate is milder, so less energy is needed to heat your home.

Ways to cut your heat pump bills

You can take several steps to reduce how much you spend on running your heat pump. Small changes in efficiency and energy use can add up to noticeable savings.

1. Improve your system’s efficiency
Choose a heat pump with a higher efficiency rating. A well-installed system with a rating above 300% will give you more heat for every unit of electricity used. Keeping your pump serviced also helps it perform at its best.

2. Upgrade your insulation
Good insulation stops heat escaping through walls, floors, and ceilings. This means your heat pump doesn’t need to work as hard, lowering your energy bills.

3. Fit double glazing
Double glazed windows reduce heat loss, keeping your home warmer for longer. This makes your heat pump’s output more effective and helps you save money.

4. Switch to a smart tariff
Choosing the right energy tariff can make a big difference. Some suppliers offer heat pump tariffs or time-of-use tariffs that let you pay less for electricity at off-peak times. For example, customers on certain smart tariffs like Cosy Octopus have reported savings of several hundred pounds each year.

5. Monitor your usage
Using a smart meter helps you track when and how much electricity you use. This makes it easier to shift some heating to cheaper times of the day, cutting costs further.

6. Look for financial support
Government grants, such as the Boiler Upgrade Scheme, can help cover installation costs. While this doesn’t lower running costs directly, it reduces the overall expense of switching to a heat pump, making the investment easier to manage.

By combining efficiency upgrades, smart tariffs, and better home insulation, you can keep your heat pump running costs under control while enjoying a comfortable and energy-efficient home.

Heat pump service costs

Keeping your heat pump in good condition helps it last longer and work efficiently. A professional service every two to three years is recommended, as it ensures the system runs smoothly and avoids costly breakdowns.

Typical prices for a service are:

It’s worth asking your installer if ongoing maintenance can be included in your purchase package, as this may reduce your long-term expenses.

You can also carry out simple checks at home. These small tasks keep the unit clear and help it perform better without extra cost. For example:

• Clear leaves, dust, or snow from the outdoor fan

• Clean or replace filters when needed

• Check airflow around the unit remains unobstructed

Adding a protective cover to the outside unit can also help, especially if you live in a coastal area or somewhere with harsh weather. This extra step shields the system from sea spray, ice, or heavy rain.

By combining regular professional servicing with your own simple maintenance, you can extend the life of your heat pump and save money over time.

What affects the price of my heat pump?

When you start looking into heat pumps, you’ll notice that the cost can vary a lot. The final price depends on several key factors, including the kind of system you choose, the size that suits your home, and how efficient the unit is. Other things, like whether you need radiator upgrades or if you can benefit from the Boiler Upgrade Scheme, will also play a role in the total amount you pay.

System type

The type of heat pump you pick has the biggest influence on cost. Some systems are much cheaper to buy and install, while others come with higher upfront prices but may offer longer-term benefits.

Here’s a simple breakdown of common options:

Air-to-air systems are usually the cheapest, but they don’t heat water for taps or showers. Ground source systems are the most costly, as they need major installation work. High-temperature models can be useful if you want a system that works more like a traditional boiler, but they cost more than standard air source units.

When comparing types, always factor in installation. A ground source system, for example, may need large trenches or boreholes, which adds to labour costs. Air source systems, on the other hand, are quicker to fit and usually cheaper to install.

System size

The size of your heat pump matters just as much as the type. Heat pumps are measured by their heating capacity, which is often shown in kilowatts (kW) or British Thermal Units (BTU).

• 1 tonne capacity = 12,000 BTU/hour = about 3.5 kW

• Most homes need between 1 and 5 tonnes, depending on size and insulation.

If you choose a unit that’s too small, it will run constantly, struggle to heat your home, and increase your electricity bills. If you go too large, you’ll pay more upfront and the system may short-cycle, which can shorten its lifespan.

The right size depends on your home’s insulation, number of rooms, and heating demand. Installers usually carry out a heat loss survey to calculate this. If your home has poor insulation or older radiators, you may need radiator upgrades or other improvements to get the best out of your system.

System efficiency

Efficiency ratings also affect price. A more efficient heat pump usually costs more to buy, but it can save you money on running costs. Efficiency is often measured by the Coefficient of Performance (COP) or Seasonal Coefficient of Performance (SCOP).

Typical efficiency ranges:

• Air source: 300% – 400%

• Ground source: 400% – 500%

• Water source: 300% – 400%

• High-temperature: around 300%

This means that for every 1 kWh of electricity you use, you could get 3–5 kWh of heat output. In comparison, a modern gas boiler is usually less than 100% efficient.

Although high-efficiency models cost more upfront, they can reduce your long-term bills. If you’re eligible for the Boiler Upgrade Scheme, you may also get financial support to offset the higher purchase price of these systems.

When looking at efficiency, think about your electricity tariff too. Some suppliers offer special heat pump tariffs, which can make running costs even lower.

Next steps

Before moving forward, it helps to check if your home is ready for a heat pump. A simple way to do this is by lowering your boiler flow temperature to 50°C during a colder period. Pay attention to how comfortable your rooms feel.

• If your home stays warm, you’re in a good position to switch.

• If it feels chilly, think about adding extra insulation, larger radiators, or underfloor heating.

These upgrades can make your system run more efficiently and keep your home comfortable.

When you feel prepared, you can request quotes from different installers. Comparing a few options in a clear table of prices, services, and warranties will help you choose the best fit for your budget and needs.

Summary

Keeping your heat pump in good condition helps you cut costs over time. When you carry out small maintenance tasks yourself, you avoid paying extra for simple jobs. Regular attention also keeps the system running smoothly, which means you spend less on energy.

The type of heat pump you choose has a big impact on both price and performance. Air source heat pumps are usually the most affordable to install, while ground source systems can become very expensive, especially if boreholes are required. For example, a vertical ground source setup with boreholes can climb to around £49,000, which is more than double the cost of a standard horizontal installation.

Water source heat pumps can also carry higher costs if your home needs upgrades to work with the system. However, they bring a benefit that air source models cannot match. Because natural water temperatures remain steady between about 7°C and 12°C throughout the year, water source heat pumps deliver more consistent results. This makes them reliable for households where a steady output is important.

When looking at options, it helps to compare the main features side by side:

You should always gather tailored quotes before making a decision. Prices vary depending on your property, location, and the upgrades you may need. By answering a few simple questions, you can receive bespoke quotes from trusted installers without paying a fee.

It’s also worth remembering that the “best” system is not the same for everyone. Your home’s layout, your budget, and your long-term energy goals all play a role in deciding which option is right for you. Taking time to compare choices gives you a clearer picture of what will work best for your situation.

Beyond the technical details, you can feel confident knowing that experts continue to research and report on these systems. Writers and reviewers with backgrounds in sustainability, technology, and environmental policy provide insights that help you make informed choices. Their work highlights both the challenges and the opportunities linked to heat pump adoption, ensuring you have access to balanced and practical guidance.

By combining careful research with free quotes, you can approach the decision with clarity. This way, you avoid unnecessary costs and choose a system that supports both your comfort and your budget.

Frequently Asked Questions

What affects the cost of installing a heat pump?

The price you pay for installation depends on several things:

• Size of your home – larger homes usually need bigger systems.

• Type of heat pump – air source models are often cheaper than ground source.

• Extra work needed – upgrades like new radiators, pipework, or insulation can add to the bill.

• Labour and location – costs can vary depending on where you live and the installer you choose.

What are the running costs of a heat pump?

A heat pump runs on electricity, so your costs depend on your tariff and how much energy your home uses. While electricity is more expensive than gas per unit, heat pumps are very efficient, which helps balance this out. You may also save more if you switch to a cheaper electricity plan, such as those listed on heat pump tariffs.

How does efficiency affect what you spend long term?

The efficiency of a heat pump is measured by how much heat it produces compared to the electricity it uses. A well-installed system with good insulation can give you more heat for less money. Over time, higher efficiency means lower bills, making the system more affordable to run.

Are government grants available to reduce the cost?

Yes, in the UK you can apply for the Boiler Upgrade Scheme, which currently offers up to £7,500 towards the cost of an air source or ground source heat pump. This can bring the upfront price down significantly, with some installations falling to around £4,460 after the grant.

How long does a heat pump last and why does it matter?

Most heat pumps last between 15 to 20 years with proper care. A longer lifespan means you spread the initial cost over many years of use. This makes the investment more manageable compared to replacing a traditional boiler more often.

What should you expect for maintenance costs?

Heat pumps need less upkeep than gas boilers, but you should still budget for:

• Annual servicing – usually £150 to £200.

• Occasional repairs – costs vary depending on the part.

• Cleaning filters and outdoor units – simple tasks you can often do yourself.

Regular maintenance helps your system run efficiently and can extend its lifespan.