In November 2024 the government committed an initial £3.4 billion for financial years 2025-26 to 2027-28 for its Warm Homes Plan1. The announcement said up to 300,000 households would benefit from home upgrades in the coming year2. The funding included £1.8 billion for fuel poverty schemes3.
The plan sits alongside existing grant schemes. The Boiler Upgrade Scheme was given an additional £30 million for the 2024/2025 financial year, raising its total budget to £180 million, with £295 million set for 2025/20264. Homeowners can receive £7,500 towards an air source or ground source heat pump, £5,000 towards a biomass boiler in rural areas off the gas grid, or £2,500 towards an air-to-air heat pump4. The maximum grant under the scheme was increased from £5,000 to £7,500 in 20231.
Planning rules were also relaxed. The requirement for heat pumps to be installed more than one metre from a property boundary was removed, and the size limit for dwellinghouses increased from 0.6m3 to 1.5m33. The number of heat pumps permitted for detached houses doubled from one to two3.
The Energy Company Obligation (ECO) has been the main energy efficiency scheme over the last decade, delivering 4.4 million measures in 2.6 million homes across Great Britain between 2013 and December 20251. Of these measures, 25% were cavity wall insulation, 21% new boilers, 18% loft insulation, 23% other heating measures, 6% solid wall insulation and 4% other insulation1. At Budget 2025 the government announced that funding for ECO would end in March 2026, with energy efficiency measures under the scheme continuing until the end of 20261.
"In November 2024 the government committed an initial £3.4 billion for financial years 2025-26 to 2027-28 for its Warm Homes Plan."
Analysis published by the Energy and Climate Intelligence Unit in June 2025 said implementing the plan as pledged would save households £300 per year on average, and up to £500 annually in some cases6. It said cutting funding at the Spending Review could cost households more than £1.4 billion a year in avoidable energy bills in future6.
| Measure | Grant value |
|---|---|
| Air source heat pump | £7,500 |
| Ground source heat pump | £7,500 |
| Biomass boiler (rural, off gas grid) | £5,000 |
| Air-to-air heat pump | £2,500 |
Why it matters for households
The funding shapes what support is available for improving a home's energy performance. The Boiler Upgrade Scheme requires an Energy Performance Certificate with no recommendations for loft or wall insulation, unless an exemption applies4. Homes with an existing fossil fuel system to be fully replaced are eligible, and the commissioning date must be on or after 1 April 20224. New build properties are not normally eligible unless self-built4.
For households in older or hard-to-treat properties, the practical effect of the funding is that grants cover part of the upfront cost of a heat pump or biomass boiler, while the running cost depends on electricity and gas prices. The ECIU analysis said those living in homes at EPC band F could miss out on close to £500 worth of annual energy bill savings, compared to £175 in an EPC band D home6. It said a household that misses out on upgrades could pay nearly £1,500 extra on bills over the rest of this Parliament6.
The scale of the task is set out in the housing stock. At the end of 2025 an estimated 5.0 million properties in Great Britain with cavity walls had no cavity wall insulation, 23% of the total; around 7.7 million homes with lofts (29%) had less than 125mm of loft insulation; and 7.6 million homes with solid walls (89%) did not have solid wall insulation1. The government has a target that all fuel-poor homes should be at least band C by 2030 and an aspiration for as many homes as possible to be at least band C by 20351.
What happens next
The full Warm Homes Plan was launched in January 2026, including £15 billion of public investment across the UK over financial years 2025-26 to 2029-301. The government said this will upgrade up to 5 million homes with solar, batteries, heat pumps and insulation1. In the spending review in June 2025, the government confirmed £13.2 billion in funding for the scheme pledged in the Labour manifesto, covering spending between 2025-26 and 2029-302. After scrapping ECO at the 2025 budget, the treasury earmarked an extra £1.5 billion of funding for the Warm Homes Plan over five years2.
The plan's central target is for 450,000 heat pumps to be installed annually by 2030, including 200,000 in new-build homes and 250,000 in existing homes2. Landlords will need to upgrade their properties to meet EPC ratings B and C across two new-style EPC metrics by October 20302. From 21 July 2026 to 31 March 2027, the Boiler Upgrade Scheme grant will increase for eligible properties in England and Wales which rely on heating oil or Liquefied Petroleum Gas, with £9,000 available towards an air source or ground source heat pump4.
Sources6 cited
- [](https://researchbriefings.files.parliament.uk/documents/CBP-9889/CBP-9889.pdf), researchbriefings.files.parliament.uk
- Q&A: What UK’s ‘warm homes plan’ means for climate change and energy bills - Carbon Brief, carbonbrief.org
- Warming our homes – sustainably | Mitsubishi Electric, les.mitsubishielectric.co.uk
- What is the Boiler Upgrade Scheme? - Uswitch, uswitch.com
- Our guide to the Boiler Upgrade Scheme - Cosy Homes Oxfordshire, cosyhomesoxfordshire.org
- Energy & Climate Intelligence Unit | Warm Homes Plan: gutting funding…, eciu.net