Which? published a policy paper on financing for low carbon home heating on 27 October 2025, setting out eight tests for ensuring that financial products supporting heat pump purchases work for consumers, alongside recommendations to government and business1.
The consumer body said the market is at an important point, with relatively traditional products such as mortgages and loans available and more innovative arrangements, including Third Party Ownership and Property Linked Finance, either entering the market or awaiting government decisions1. It reported that roughly 60 green mortgage products are available today, up from four in 20191. The paper states that the Boiler Upgrade Scheme offers most households a grant of £7,500 towards a heat pump, against an average installation cost of £13,500, leaving many households paying more than the cost of replacing a gas or oil boiler1. It adds that 81% of homeowners planning energy improvements intend to use their own savings rather than other funding1.
The eight tests cover a clear regulatory framework; access to finance for different groups of homeowners; good quality information and advice; good quality products, installations and services; clear and fair contract terms; clear options and pricing of bundled services; protection in the event of a default; and effective handling of complaints and disputes1.
Among its recommendations, Which? said consumer hire (leasing) agreements should not be allowed in this market until the government has effectively addressed gaps in protection, and that Heat as a Service options should not be allowed until competition and choice issues arising from long contracts are resolved1. It said consumers should not be locked into tariffs or services such as optimisation, repair and maintenance plans for more than two years, and that financial providers should require all installations funded by their products to be carried out by MCS certified installers1.
"Until the government has effectively addressed these gaps, consumer hire (leasing) agreements should not be allowed in this market."
The paper notes that installers using a Boiler Upgrade Scheme grant must be certified by MCS or an equivalent scheme, but that there is no requirement for new builds to use MCS installers1. It also sets out the existing consumer protection landscape, including the Financial Conduct Authority's Consumer Duty, introduced in July 2022, which requires that "a firm must act to deliver good outcomes for retail customers"1. It cites the suspension of court orders for forced prepayment meter installations in 2023 due to concerns about vulnerable consumers, energy debt of £3.1 billion, and an estimated 13% of households in England, or 3.17 million, in fuel poverty1.
Why it matters for households
For a household weighing up a heat pump, the paper describes a market where the upfront cost gap is typically met from savings, a loan or a newer financing arrangement, and where the protections attached to each route differ. Which? states that effective protections should apply to any financial product used to buy a heat pump, whether or not government funding is used alongside it, which it says will matter more if the Boiler Upgrade Scheme is scaled back1. Its concerns centre on long contracts: it warns that consumers locked into tariffs and services for many years face reduced choice, and that repossession following a default would disconnect a household from its source of heating1. It recommends that all businesses financing heat pump installations be subject to OFGEM licensing conditions or equivalent rules covering the process before disconnection1.
What happens next
The paper makes recommendations to government and business rather than announcing measures. It calls on the government to develop guidance setting out the regulations and requirements under consumer protection law, FCA rules and MCS relevant to these products, and mandatory key information sheets to support comparison of financial packages1. It says any future reform of the Consumer Credit Act, including in relation to Green Finance, should maintain protections such as Section 751. No timetable for government responses has been reported.
Sources1 cited
- Financing for low carbon home heating - Which?, which.co.uk