Heat Pump Grant 2025 Update: Changes Lancashire Homeowners Need to Know

The government heat pump grant continues into 2025 offering up to £7,500 towards air source or ground source heat pumps for eligible homeowners in England and Wales. The scheme, which launched in 2022, has been extended to March 2028 with an increased budget, meaning Lancashire homeowners now have more time and better access to funding. Application rates have surged, with over 35,000 vouchers issued nationally in 2024 alone. Here is what has changed, who qualifies, and how to make the most of the grant in Lancashire.

What Has Changed in 2025

The most significant change is the scheme’s extension to March 2028, giving Lancashire homeowners a longer window to plan and budget for a heat pump installation. Previously, the scheme was due to end in March 2025, which created urgency and long waiting lists. The extension means less rush, more installer availability, and better planning time.

The grant amount for air source heat pumps was increased from £5,000 to £7,500 in October 2023, and this higher amount continues through 2025. For ground source heat pumps, the grant also remains at £7,500. Biomass boilers were removed from the scheme in 2024 and remain ineligible.

The budget has been significantly increased. The government allocated additional funding to meet growing demand, following months where the monthly allocation was being used up within days. From 2025, the monthly voucher limit has been raised, reducing the wait times that frustrated many Lancashire applicants in late 2023 and early 2024.

There is no longer a requirement for the property to have an EPC before applying. Previously, a valid EPC was mandatory and had to show no outstanding recommendations for loft or cavity wall insulation. The EPC requirement was removed in late 2024 to speed up the application process, though your installer must still ensure the property is suitable for a heat pump through their installer installer survey.

Who Qualifies for government grant scheme in Lancashire?

The eligibility criteria are straightforward. You qualify if you own the property (or are a landlord), the property is in England or Wales, you are replacing a fossil fuel heating system (gas, oil or LPG boiler, electric storage heaters, or coal/wood heating), and the property has not previously received a government grant scheme voucher.

There is no means test – government grant scheme is available regardless of income. A homeowner in a £500,000 house in the Ribble Valley has exactly the same entitlement as someone in a £100,000 terrace in Burnley. The grant is available to owner-occupiers, landlords (for rental properties), and self-builders.

Social housing is excluded, as housing associations and councils have separate funding streams for heat pump installations. If you rent from a private landlord, the landlord must apply and fund any remaining costs, though you may benefit from the improved heating system.

Properties with existing renewable heating systems (such as a broken or old heat pump) do not qualify, as government grant scheme is specifically for replacing fossil fuel systems. New-build properties are also excluded.

How Much Does a Heat Pump Cost After the Grant?

Total installed costs for air source heat pumps in Lancashire typically range from £8,000 to £15,000, depending on the system size, the brand, and the complexity of the installation. After up to £7,500 in government grants, the homeowner’s contribution is usually £2,000 to £7,500. Here is how it breaks down for common Lancashire property types:

• Two-bedroom terrace in Burnley or Accrington: total cost £8,000 to £10,000, after government grant £500 to £2,500
• Three-bedroom semi in Preston or Blackburn: total cost £10,000 to £13,000, after government grant £2,500 to £5,500
• Four-bedroom detached in the Ribble Valley or Fylde: total cost £12,000 to £15,000, after government grant £4,500 to £7,500

These figures include the heat pump unit, installation labour, hot water cylinder, controls, any necessary electrical upgrades, and relevant certification. They do not include radiator upgrades, which add £250 to £500 per radiator if needed. Most Lancashire homes need zero to three radiator changes, adding £0 to £1,500.

Remember that heat pump installations are currently zero-rated for VAT, meaning you pay 0% VAT on both materials and labour. This saves an additional 20% compared to what the cost would be at the standard rate.

How to Apply: The Process Step by Step

You do not apply for government grant scheme directly. Instead, your qualified installer applies on your behalf through the government grant portal. The process works like this:

First, contact one or more qualified heat pump installers in Lancashire for a survey and quote. Get at least two quotes to compare prices and approaches. The installer will survey your property, calculate the system requirements, and provide a detailed quotation showing the total cost, the government grant deduction, and your net payment.

Second, once you accept a quote, the installer submits a government grant scheme application to the energy regulator on your behalf. This includes property details, the proposed system specifications, and confirmation that the installation meets the scheme criteria. the government processes applications within a few working days and issues a voucher if approved.

Third, the voucher is valid for three months (recently extended from the original shorter period). The installation must be completed and commissioned within this window. If delays occur, extensions can sometimes be requested.

Fourth, after installation, the installer notifies the energy regulator that the work is complete. the government pays the £7,500 directly to the installer, and you pay only your agreed contribution. You never handle the grant money yourself.

Finding an certification Installer in Lancashire

The installer must be qualified to apply for government grant scheme funding. There are currently over 50 qualified heat pump installers operating within a 30-mile radius of Preston, and the number is growing as demand increases. Search the installer installer directories () for installers in your area.

When choosing an installer, look beyond price. Ask about their experience with your property type (Victorian terraces need different approaches to modern detached homes), the brands they install and why, their approach to system design (a proper heat loss calculation for every room, not a quick estimate), and their aftercare and maintenance packages.

Request references from previous Lancashire installations, ideally in similar property types to yours. A good installer will be happy to connect you with past customers. Check online reviews but weight recent reviews more heavily, as installer quality can change over time.

Combining government grant scheme with Other Funding

government grant scheme can be combined with other energy efficiency funding for a comprehensive upgrade package. government energy efficiency schemes or government insulation scheme can fund insulation improvements before or alongside the heat pump installation, reducing the heat demand and allowing a smaller, cheaper heat pump. Your local council may have additional grants or low-interest loan schemes for energy efficiency work.

Some Lancashire homeowners combine government grant scheme with a home improvement loan from their bank or building society. With heat pump installations qualifying for 0% VAT and up to £7,500 in grants, the remaining cost can often be financed through affordable lending. Several green mortgage products also offer preferential rates for homes with renewable heating systems.

If you have solar panels, adding a heat pump creates a powerful combination where your solar generates electricity that powers your heating. Some Lancashire homeowners have reduced their combined heating and electricity bills to under £50 per month by pairing solar panels with a heat pump and smart controls.

How long does a government grant scheme application take?

the energy regulator typically processes applications within five to ten working days. However, the overall timeline from initial enquiry to completed installation is usually eight to sixteen weeks, as it includes the installer survey, quote acceptance, application processing, and scheduling the installation work. Planning ahead is advisable, especially if you want to avoid installing during the coldest winter months.

Can I get government grant scheme if I already have solar panels?

Yes. Having existing solar panels does not affect government grant scheme eligibility. In fact, solar and heat pump systems complement each other extremely well. The government grant applies regardless of any other renewable technology already installed at the property. The only restriction is that you cannot have previously received a government grant scheme voucher for the same property.

Is the government grant taxable?

No. The government grant is not taxable income for homeowners. It is paid directly to the installer and deducted from your bill, so you never receive the money yourself. There are no tax implications for residential properties. For landlords, the tax treatment may differ depending on your circumstances, so consult your accountant.