The Department for Energy Security and Net Zero announced on 21 November 2024 the first major steps of the Warm Homes Plan, stating that up to 300,000 households will benefit from home upgrades in the next year1. The package covers heat pump grants, energy efficiency funding for social housing and lower income households, planning reform in England and support for UK heat pump manufacturing1.
On the Boiler Upgrade Scheme, the government said it would add £30 million this financial year and almost double the budget to £295 million for the next financial year, with homeowners in England and Wales able to get a £7,500 heat pump grant1. The scheme recorded its highest number of applications ever in October, according to Ofgem1. The government also said it would allow more households in England to install an air source heat pump without submitting a planning application from early next year, by removing the rule requiring installation at least one metre from a property boundary, with rules still in place around listed buildings1. It cited figures from Octopus showing 34% of those who order a heat pump are discouraged or drop out for reasons attributed to planning permission1.
The government said around £3.2 billion of investment in warmer homes across 2025 to 2026 would come from government, social housing providers and supplier obligations1. An initial £3.4 billion was committed in the Autumn 2024 Budget for the Warm Homes Plan covering 2025 to 2026 to 2027 to 2028, with approximately £1 billion allocated to 2025 to 20261. The breakdown given was £374m for the Warm Homes: Social Housing Fund and £88m for the Warm Homes: Local Grant1.
| Funding stream | Homes upgraded in 2025 to 2026 | Grant funding |
|---|---|---|
| Warm Homes: Social Housing Fund | up to 60,000 | £374m |
| Warm Homes: Local Grant | up to 9,000 | £88m |
| Boiler Upgrade Scheme | up to 39,000 | £295m |
| ECO4 and Great British Insulation Scheme | up to 200,000 | £1.4bn to £1.6bn supplier-led |
Source: GOV.UK1
The government also confirmed a reformed Clean Heat Market Mechanism from 1 April 2025, with changes intended to give manufacturers time to scale up supply chains, and said government support would be available for each heat pump installation required under the mechanism in 2025 to 20261. Over £5 million was awarded to Ideal Heating as the first award from the Heat Pump Investment Accelerator competition1.
Minister for Energy Consumers Miatta Fahnbulleh said:
"The idea at the heart of our Warm Homes Plan is a simple one, all families deserve the security of a home they can afford to heat."
Energy UK, in a blog published on 22 November 2024, described the Clean Heat Market Mechanism as "much weakened since the former Government's proposals in 2022" and said the Autumn Budget's £3.4 billion was "primarily a reiteration of spending that was committed by the then-Chancellor Jeremy Hunt in the 2023 Autumn Statement"2. It also said the Labour Party's earlier £20 billion commitment for its Green Prosperity Plan "was scrapped last year"2. Energy UK reported that there were less than half the number of heat pumps installed in 2023 than were needed to keep the UK on a pathway to Net Zero, and that 190,000 fewer heat pumps than required had been installed in the four years since 20202.
Nesta said over 3 million homes need to install heat pumps or other low-carbon heating over this Parliament, a 12-fold increase compared to the last Parliament3. Energy Systems Catapult welcomed the removal of planning barriers and said including air to air heat pumps in permitted development rules was "a good step at supporting a wider range of technologies"4. The National Insulation Association confirmed the 300,000 homes figure for the next financial year and listed the removal of the 1m planning restriction among the announcements5.
Why it matters for households
For a household considering a heat pump, the two changes with the most direct effect are the grant budget and the planning rule. The £7,500 grant level is unchanged, but a larger Boiler Upgrade Scheme budget means the scheme is less likely to run short of vouchers within a financial year1. Removing the one metre boundary rule in England widens the number of properties where an air source heat pump can be sited without a planning application, which matters most for terraced and semi-detached homes with limited outdoor space1. Energy Systems Catapult said placement would then be considered on actual impacts such as noise rather than what it called arbitrary red tape4.
The insulation and social housing funding runs through separate routes: the Warm Homes: Social Housing Fund and the Warm Homes: Local Grant, plus the supplier-led ECO4 and Great British Insulation Scheme1. The government estimated insulating more homes could save homeowners around £200 per year, and said a heat pump can save families around £100 a year compared to a gas boiler by using a smart tariff effectively1. Energy UK noted that the announcements came alongside a further increase in the energy price cap2.
On energy independence, the government framed the plan as reducing reliance on international gas markets and increasing use of homegrown energy1. Energy UK said the UK will remain exposed to volatile global fossil fuel markets for as long as its homes remain poorly insulated2.
What happens next
The reformed Clean Heat Market Mechanism is due to take effect on 1 April 20251. The planning changes for air source heat pumps in England are expected from early next year1. One supplier, E.ON Next, states that the policy changes are expected to come into effect from mid-2025, and that heat pumps up to 1.5m in size would not need planning permission, with detached homes able to install two heat pumps without prior approval6. That detail is not in the government announcement1. Energy UK said there is widespread expectation that the Spending Review in late spring will provide more clarity on funding, and called for early clarity on post-2026 arrangements for ECO2. Energy Systems Catapult said further funding will be needed in the Spring spending review4.
Sources6 cited
- Help to save households money and deliver cleaner heat to homes - GOV.UK, gov.uk
- Putting people first in a Warm Homes Plan - Energy UK, energy-uk.org.uk
- Heat pump reforms “cut the red tape” to help decarbonise homes | Nesta, nesta.org.uk
- Response to the government's Warm Homes Plan announcement – Katrina Young - Energy Systems Catapult, es.catapult.org.uk
- Summary – November 2024 Warm Homes Plan announcements - National Insulation Association, nia-uk.org
- Government policy updates make it easy to get an air source heat pump., eonnext.com