The Government published its Warm Homes Plan on 21 January 2026, setting out £15 billion of public investment in home upgrades1. The statement was made in the House of Commons and repeated in the House of Lords on 27 January 20261. The plan expands the Boiler Upgrade Scheme and, for the first time, offers a universal grant of £2,500 for a heat battery or air-to-air heat pump, alongside £7,500 to install a conventional heat pump1.
The Heating and Hotwater Industry Council said the Boiler Upgrade Scheme had been expanded to include air-to-air heat pumps, with their lower installation cost reflected in the £2,500 grant compared with £7,500 for air-to-water heat pumps2. Air-to-air systems distribute heat via indoor fan units and must be installed by F-gas-qualified engineers, typically do not produce domestic hot water, and cannot be installed in kitchens or bathrooms without ducting2. The council described them as a practical option for smaller properties and apartments that lack wet heating systems2.
"For the first time, we have a universal offer of £2,500 for a heat battery or air-to-air heat pump, as well as £7,500 to install a conventional heat pump"
The plan also sets aside up to £2 billion to subsidise zero and low-interest loans for solar panels, batteries and other technologies, with a further £3 billion available for loans and investments through a warm homes fund1. Low-income households will receive free of charge packages of upgrades backed by £5 billion of public investment, which NAPIT said could include fully funded installations of solar panels and a battery to the full average cost, currently between £9,000 and £12,0003. The Government says new rules will mean every new home comes with solar panels by default, tripling the number of homes with rooftop solar by 20303.
| Measure | Support |
|---|---|
| Conventional heat pump | £7,500 universal grant1 |
| Heat battery or air-to-air heat pump | £2,500 universal grant1 |
| Solar and battery loans | Up to £2 billion set aside1 |
| Low-income upgrade packages | £5 billion public investment1 |
The Government said it is abolishing the ECO scheme and funding support through public investment rather than levies on bills, and will establish a new warm homes agency by consolidating functions from Ofgem and other organisations and abolishing Salix1. By 2030, private landlords will have to upgrade their properties to meet minimum standards of energy efficiency1. The Heat Training Grant, which provides up to £500 for existing heating engineers to train to install heat pumps in England, will be increased over the next three years to March 20293.
Why it matters for households
The £2,500 offer is the first universal grant aimed at heat batteries and air-to-air heat pumps, which matters for homes without a wet heating system, such as flats and smaller properties, and for all-electric or off-gas homes where air-to-air units can replace electric storage heaters and direct-electric systems2. For homes with radiators, the £7,500 grant for a conventional heat pump continues1. The loan support for solar panels and batteries is aimed at households that want to generate and store their own electricity, which bears on a home's energy independence1. The Lords debate recorded concerns that the plan's impact on household bills and the operating costs of heat pumps had not been addressed, and that costs placed on landlords could be passed on to tenants; the Government's response to those points has not been reported1.
What happens next
The Government said it will publish the future homes standard shortly, with solar panels fitted as standard in new homes1. The Heat Training Grant increase runs over the next three years to March 20293. The Government said it will establish a new task force with the TUC to ensure jobs in the industry are well paid and highly skilled1.
Sources3 cited
- Warm Homes Plan - Hansard - UK Parliament, hansard.parliament.uk
- Heating and Hotwater Industry Council, hhic.org.uk
- NEWS | NAPIT Welcomes Warm Homes Plan | NAPIT, napit.org.uk