How much could a heat pump cut bills in an electrically heated flat?

The reason is simple physics rather than marketing. A panel heater turns every kWh of electricity into at most one kWh of heat. A heat pump uses each kWh of electricity to move three to four times that amount of heat from the outside air into your flat⁴. The catch is that the saving only appears if the unit is correctly sized, well installed and paired with a tariff that does not punish you for running it.

Panel heaters versus a heat pump in the same flat

Direct electric heating is the most expensive way to heat a home per unit of heat, because every kWh you buy becomes, at best, one kWh of warmth. A heat pump breaks that one-to-one limit: for each kW of electricity used, heat pumps deliver three to four times more usable heat than direct electric heating such as electric radiators or boilers⁴. The Energy Saving Trust puts it more simply: heat pumps are about three times more efficient than standard electric heaters⁷.

Real installations bear this out. Systems monitored on the Heat Pump Monitor platform operate, on average, at 39% higher efficiency than systems installed under the Electrification of Heat programme, which suggests the performance gap between a good and an average installation is material⁸. The comparison holds against newer electric technologies too: heat pumps use two to four times less electricity than infrared heating to produce the same amount of heat⁹.

For a flat specifically, an air-to-air heat pump is worth knowing about. It blows warm (and in summer, cool) air through indoor units rather than heating water for radiators, and it is described as especially cost-effective in smaller houses or flats with relatively few rooms, particularly homes that overheat in warm weather¹⁰. An air-to-water system, which feeds radiators or underfloor heating, is the more common choice where a wet system is wanted. Our page on electric boilers versus heat pumps for flats sets out that comparison in detail.

Why the tariff you are on changes the saving

Because a heat pump runs on electricity, its running cost tracks your electricity price, and electricity prices include levies that gas bills do not. A Parliamentary briefing is blunt about the consequence: reducing the price of electricity relative to gas would make heat pumps more competitive, and additional savings are possible with flexible electricity tariffs¹¹. For a flat leaving electric heating, the gas comparison matters less, but the levy burden on electricity is exactly why the tariff choice is so important.

The evidence on tariffs is consistent in direction but wide in size. Ofgem estimates households with heat pumps could save more than £250 annually by shifting to a smart tariff and using their heat pump flexibly⁵. Official modelling for a standard, well-insulated detached house puts the smart-tariff gain at around £100 per year¹². A study by energy consultancy Cornwall Insight found you can save money just by being on a typical time-of-use tariff¹³. And a heat pump, solar and battery combination operated flexibly can save households £810 more per year than the same equipment on a single-rate tariff³.

The size of the saving also depends on how the supplier controls the load. Ofgem's consumer protection guidance on load control gives worked examples for a large house on electric heating at £300 per month, where savings range from 2% (£6 a month) with low control up to 6% (£18 a month) with high control¹⁶. Those figures are about supplier-controlled load shifting, not heat pumps, but they show how much the method of control drives the outcome.

What has to be in place before the savings appear

A heat pump that is badly specified can leave bills higher, not lower. Heat pumps require electricity to run and must be specified correctly for the property they are installed in to work efficiently; otherwise energy bills can be high¹⁷. Insulation matters too: topping up wall, floor and loft insulation before installing a heat pump will help reduce its running costs¹⁸. In a flat this may mean checking what sits inside your demised walls and floor, which our page on energy improvements in flats covers.

The electrical side is a common stumbling block in older blocks: the home's electrical supply must be capable of supporting the system, and older properties may require upgrades to the consumer unit or electrical improvements¹⁹. Under the Boiler Upgrade Scheme rules, supplementary heating is only acceptable so long as the heat pump can provide the full space heating demands of the property²⁰, so the installation must be designed to carry the whole flat. Building regulations guidance for new dwellings also requires that the operating and maintenance information given to the owner includes the heat loss calculation, the design flow temperature, confirmation of competent person scheme membership, the size of the emitter circuit and minimum setback temperatures²¹. Ask for that pack: it is the evidence the system was designed for your flat rather than guessed.

Consent is the other hurdle. Permitted development rights allow air source heat pumps to be installed on detached houses or blocks of flats without a planning application, subject to conditions²², and ground source systems within the grounds of a house or block of flats do not require planning permission either, though listed building consent may be needed if the property is listed²³. If you own the leasehold rather than the freehold, the freeholder or management company will usually need to consent to the work; our page on leasehold consent for energy work explains the process.

How big the unit can be, and where it can go

Flats face tighter physical limits than houses. For permitted development, the volume of the air source heat pump's outdoor compressor unit, including its housing, must not exceed 1.5 cubic metres on a house, but only 0.6 cubic metres on a block of flats²⁴. The same 0.6 cubic metre limit for blocks of flats appears in local planning guidance⁶. In practice this rules out the largest units but leaves plenty of small air-to-water and air-to-air models suitable for a single flat's heat demand.

Sizing the heat output is a separate question from the box it comes in. Under the Warm Homes: Local Grant rules for retrofit and packaged hybrids, the heat pump must be sized to provide a minimum of 55% of the calculated heat load²⁵. A well-insulated flat has a small heat load, so the unit needed is correspondingly small, which helps with both the permitted development volume limit and the noise and siting conditions that planning guidance attaches to installations⁶.

Where the savings figures come from

The percentages quoted across this page come from different sources with different methods, and it is worth knowing which is which. The "up to 60%" figure is a policy statement about what heat pumps can achieve, not a measurement of your flat¹. The "around 40%" figure is an installer's report of what residents actually saw when replacing old electric heaters². Savings estimates of this kind are typically calculated from a weighted average of projected, current and recent energy price caps²⁶, which means they move as prices move.

For context against gas, one estimate puts an air source heat pump at £260 a year cheaper than an old gas boiler²⁷, but the Energy Saving Trust cautions that not everyone who installs a heat pump will see savings straight away, because electricity is currently more expensive than gas¹⁸. The largest claimed reductions come from combined systems: in some cases, energy bills were reduced by more than 80% compared with a gas-heated home on a standard tariff where a heat pump, solar panels and battery storage were operated on an appropriate tariff, and importantly those savings do not rely on households changing their heating patterns or actively altering their behaviour²⁸.

Longer-term projections are more optimistic still, and should be treated as modelling rather than fact. One industry pathway assumes heat pump electricity at 0.017 £/kWh by 2050 and an installed cost of £8,000 for heat pumps in flats by 2030²⁹. Those assumptions, not today's prices, are what produce the largest projected savings.

Funding schemes and what they include

There are government grants available for heat pumps³⁰, and the Government offers grants to cover part of the cost of installing a heat pump³¹. The Clean Heat Grant scheme offers upfront capital grants to enable the installation of heat pumps and, in limited circumstances, biomass boilers, for households and small non-domestic buildings³². The Warm Homes: Local Grant also funds retrofit heat pump installations under its eligibility rules, including the 55% heat load sizing requirement mentioned above²⁵.

Two practical points apply to any grant claim. The work generally has to be done by a certified installer, which our page on the certified installer grant rule explains, and the grant rarely covers the whole cost, so our page on what you pay yourself under the Boiler Upgrade Scheme sets out the balance. For a flat, the independence gain is real: heating that no longer depends on burning fuel at all, only on electricity, and less of it. What remains is dependence on your electricity supplier, the tariff you choose and the installer who sized the system.