The HEEPS Equity Loan Pilot: The Closed Scottish Scheme

The HEEPS Equity Loan was an area-based pilot launched by the Scottish Government in January 2017, allowing homeowners, and private landlords in certain circumstances, to borrow up to £40,000 for eligible works covering energy efficiency measures, heat loss reduction measures and repairs, repayable when the home was sold or ownership transferred¹. It was never a national scheme. It ran in eight local authority areas only: Perth and Kinross, Stirling, Dundee, Glasgow City, Inverclyde, Renfrewshire, Argyll and Bute and the Western Isles².

It is closed. The pilot was stated to remain open to those who qualified until March 2021¹. There are no new applications, and a household in one of those eight areas today is directed to the same national route as everyone else in Scotland: the Home Energy Scotland Grant and Loan Scheme, introduced in December 2022³. What remains live is the loan itself for those who took one out, because an equity loan is not discharged when the scheme that issued it closes. It sits on the property until sale or transfer.

The distinguishing feature was the repayment structure. Funding was borrowed against the asset value of the property and there were no ongoing repayments; the householder paid back what had been borrowed when the property was sold or when the last applicant for the loan died². That made it a route for asset-rich, income-poor households who could not service a monthly loan, and it is the reason the pilot attracted a formal call for evidence on whether it should be rolled out nationally.

What the HEEPS Equity Loan was

The pilot sat within the Home Energy Efficiency Programmes for Scotland (HEEPS), the Scottish Government's long-running suite of domestic energy programmes, alongside the area-based delivery model that had earlier received £55 million of Scottish Government funding allocated specifically to it in 2013-14⁶. Where the area-based schemes worked street by street through councils, the equity loan worked property by property, and it attached the funding to the building rather than to the household's monthly income.

The Scottish Government's description of the pilot is direct: homeowners, including private landlords in certain circumstances, could borrow up to £40,000 for eligible works, meaning energy efficiency measures, heat loss reduction measures and repairs, and repay when the home was sold or ownership was transferred¹. That third category, repairs, is what separated it from almost every other energy scheme in Scotland. Most schemes will not touch a roof. This one would, because a leaking roof or penetrating damp makes insulation pointless.

For a household's energy independence, the logic was sound: a one-off release of capital locked in the home, used to cut the heat the building loses, with no new monthly outgoing to service. The dependence it created is equally plain. The loan is a charge against the property, so the household gives up a slice of its future equity, and the sum falls due at the point of sale or on the death of the last applicant, which is a decision that lands on the household or on its heirs rather than at a moment of the borrower's choosing⁴.

A closed scheme, and what that means for borrowers

The pilot was stated to remain open to those who qualified until March 2021¹. Nothing in the Scottish Government's later programme documents reopens it. The Home Energy Scotland Grant and Loan Scheme that succeeded the earlier national loan offer was introduced in December 2022 and sits within the Heat in Buildings Programme³.

Two practical points follow for anyone still holding one. The first is that the amount owed is fixed by the loan agreement, not by the availability of the scheme. The second is that the administration of closed schemes has been contracted out centrally, so the correspondence address a borrower used in 2018 is not necessarily the one that applies now.

The pilot years and how it was delivered

The pilot ran from January 2017¹ and was open to qualifying applicants until March 2021¹, a four-year window. It was area based, which in this context meant that eligibility was tied to living in one of eight participating local authority areas rather than to a national application process².

The spread of areas is worth noting. It mixes a dense urban authority (Glasgow City), post-industrial west of Scotland authorities (Inverclyde, Renfrewshire), a city with a large pre-1919 tenement stock (Dundee), and two of the most rural and island-heavy authorities in the country (Argyll and Bute, Western Isles). That is a deliberate test of whether a single product works across very different housing stock and very different construction costs, and it is the kind of spread that makes the resulting evidence usable for a national decision. For how rural and island costs diverge, see energy costs in Scotland's islands and remote areas.

Loan size and what £40,000 bought

The headline cap was up to £40,000 for eligible works¹. Against the Scottish alternatives of the time this was generous: the Home Energy Scotland loan and cashback offer then provided up to £15,000 of loan with up to £6,000 cashback for energy efficiency improvements, and up to £17,500 with £7,500 cashback for renewables measures⁸. The cashback element was calculated as up to 40 per cent of the loan, to a maximum of £6,000, for certain energy efficiency improvements¹.

The reason for the higher equity loan cap is the repairs category. The eligible works were not confined to measures that save energy. The pilot's own scheme material lists, under repairs:

• Roof structure, coverings and flashings
• Rainwater goods
• Chimney stacks and heads, including removal
• Work to eradicate rising and penetrating damp
• External wall repairs including finishes
• Active and passive ventilation systems
• Wet and dry rot
• Repairs considered essential to allow an approved measure to be carried out, for example if re-wiring is needed to allow electrically powered energy efficiency measures to be installed
• Other repairs considered on a case by case basis, not including purely cosmetic work⁹

On the energy side the eligible measures included heating controls⁹ and draught proofing¹⁰. Those are small-ticket items beside a new roof, which tells you where most of a £40,000 loan was likely to go in a tenement or a rural stone-built house: making the fabric sound first, then reducing the heat it loses.

Who was eligible, and why an equity loan is not a grant

There were two routes in. The loan was available for properties in Council Tax bands A to C, or for properties in all council tax bands where the owner was in receipt of qualifying benefits¹. The scheme material broadens the second route further: if any of the permanent occupiers, including the homeowner, their children or partner, or their tenants, received one of the qualifying benefits, an application could be made⁹.

That design targets two distinct groups. Bands A to C capture lower-value housing stock regardless of who lives in it. The benefits route captures low-income households living in higher-band property, which is precisely the asset-rich, income-poor profile that conventional lending fails.

The difference from a grant is not a technicality:

• A grant is not repaid and leaves the household's equity untouched.
• An equity loan is borrowed against the asset value of the property, carries no ongoing repayments, and is repaid when the property is sold or when the last applicant for the loan is deceased⁴.

The absence of monthly repayments is the benefit. The reduction in the equity available on sale, or to an estate, is the cost. Private landlords could also apply in certain circumstances¹, which mattered because the private rented sector faced tightening energy efficiency expectations in Scotland at the time the pilot was designed.

Administration: Energy Saving Trust holds the contract

Energy Saving Trust was awarded a new contract, following a competitive tender exercise, to administer and manage Scottish Government heat and energy efficiency grant and loan schemes, both live and closed. The contract started on 1 December 2023 and its initial term runs until November 2026⁵.

That phrase, live and closed, is the one that matters to a former pilot applicant: closed schemes are explicitly inside the scope of the administration contract⁵. The amount the Scottish Government pays Energy Saving Trust for administering the Home Energy Scotland grant and loan work from December 2023 onwards has been withheld under Regulation 10(5)(e) of the Environmental Information Regulations, covering the confidentiality of commercial or industrial information⁵. So the cost of administration is not in the public domain for that period.

Energy Saving Trust is not a new entrant to this role. It administered the Renewable Heat Premium Payment scheme¹¹, it administers Thermal Comfort 2 in Northern Ireland with oversight provided by the Utility Regulator¹², and it is described in UK tax guidance as a grant-awarding body¹³. It provides free and impartial advice on how to reduce carbon emissions, how to use water more sustainably and how to save money on energy bills, and operates a helpline on 0300 123 1234¹⁴.

Delivery partners and the local advice role

The equity loan pilot depended on local intermediaries to reach the households it was designed for: older owners, disabled owners and people in poor-condition property who do not respond to a national marketing campaign. The Scottish Government has described the Care and Repair and Handyperson service model as one which continues to prove its effectiveness in reaching and helping elderly and disabled people to secure improvements and adaptations to their homes and quality of life¹⁵.

With administration of live and closed schemes now sitting under a single national contract held by Energy Saving Trust from 1 December 2023⁵, the practical consequence for a borrower is that scheme correspondence runs nationally rather than through whichever local officer originally handled the application. For the household, that trades local face-to-face support for a single point of contact, and it means an enquiry about an existing loan does not depend on a local service still being in place.

What the pilot reports covered

Two published Scottish Government analyses document the pilot: an analysis of responses to a call for evidence on the potential national rollout of the home energy efficiency equity loan pilot⁹, and an analysis of responses to a homeowner feedback survey from the pilot¹⁰. Between them they set out the eligible energy measures, the eligible repairs and the two eligibility routes described above.

Separately, the Scottish Government's retrofit assessment review carries a clear statement about the standing of independent evidence commissioned in this policy area:

The pilot was not rolled out nationally in equity loan form. What replaced the national loan offer was a grant-led scheme, and the direction of travel since has been away from repayable finance secured on the home and towards grants with an optional interest-free loan attached¹⁷.

Where the scheme sits among today's Scottish options

The Home Energy Scotland Grant and Loan Scheme was introduced in December 2022³, sits within the Heat in Buildings Programme⁷, and provides grants and loans to all domestic owner-occupiers in Scotland to install clean heat and energy efficiency measures¹⁹. It is open to all domestic owner-occupiers in Scotland²⁰, with no eligibility criterion based on age or any other protected characteristic, and homeowners access it on an equal basis, as funds last⁷. A parallel Private Rented Sector Landlord Loan Scheme provides grant or loan funding to private registered landlords for their rented properties⁶.

Two further differences bear on independence. The current scheme offers eligible owner-occupiers across Scotland, including in the islands, a standalone grant without credit checks¹⁷, which removes the credit barrier that repayable finance imposes. And Scottish Government funding for replacement oil and LPG heating systems ceased on 6 September 2021, with gas heating systems and their components still eligible for the loan component; a cashback grant has been available since 2018¹⁹. The earlier loan and cashback scheme it replaced ran at modest volume: 54 agreed loan funding offers in 2017-18 and 191 in 2019-20²¹.

A household comparing the two should read them as different instruments rather than better and worse. The equity loan released a larger sum and would pay for fabric repairs, at the price of a charge on the home. The current scheme gives smaller, non-repayable grants for clean heat and efficiency, with no charge and no credit test, but will not re-roof a house. Further detail sits on the Home Energy Scotland grant and loan page, the closed loan and cashback scheme page and the HEEPS area based schemes page, and the wider picture of how support differs across the UK is set out in the guide to home energy across the UK nations.

The independence question

For the households it reached, the pilot did something the rest of the Scottish system did not: it funded the building's condition, not just its energy measures, and it did so without adding a monthly bill. A sound roof and dry walls are the precondition for insulation working at all, and for a heat pump being viable later. In that narrow sense it bought genuine long-term independence from heat loss.

The dependence it left is on the asset. The household continues to owe the sum, and it surfaces at sale or at the death of the last applicant⁴, which is a constraint on moving, downsizing or passing on the property. There is also an administrative dependence: the scheme is closed and its administration now runs through a single national contract with an initial term to November 2026⁵, so borrowers deal with whoever holds that contract rather than with the authority that first offered the loan. And nothing about the pilot touched the household's exposure to grid electricity or gas prices except through the measures installed. It reduced demand. It did not create supply.