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Boiler upgrade scheme – can landlords benefit from government grants?

3-minute read

Conor Shilling

31 May 2022

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Landlords can get a cash grant from the government towards replacing their boiler with a greener alternative.

Read on to find out more about the boiler upgrade scheme and how you can apply for funding.

What is the boiler upgrade scheme?

As part of its Heat and Buildings Strategy, the government is giving away grants of up to £6,000.

The boiler upgrade scheme aims to encourage property owners to replace existing gas boilers with low carbon heating systems such as air source heat pumps, biomass boilers, and ground source heat pumps.

Details of the scheme were first announced in the 2021 Autumn Budget. It officially launched in April 2022 and is open to homeowners in England and Wales, including private landlords, until 2025.

How does the boiler upgrade scheme work?

As a property owner, you can claim the upfront cost of a boiler alternative that uses low carbon heating technology.

Here’s what you can claim:

  • £5,000 off the cost and installation of an air source heat pump or biomass boiler
  • £6,000 off the cost and installation of a ground source heat pump

The average cost of an air source heat pump (including installation costs) can range from £8,000 to £18,000, according to green energy products comparison website GreenMatch.

Meanwhile a biomass boiler is likely to cost between £4,000 and £21,000, and the cost for a ground source heat pump is likely to range from £20,000 to £35,000.

What else do landlords need to know?

You can claim one grant for every property you own, even if you’ve previously benefited from other energy efficiency upgrades through a scheme like the green homes grant.

However, you can’t get a grant if your Energy Performance Certificate (EPC) has outstanding recommendations for cavity wall or loft insulation, or if you’ve already used government funding to buy a heat pump or biomass boiler.

It’s important to note that the scheme doesn’t apply to new build properties and there’s no funding to replace low carbon heating systems if you already have one.

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How can landlords get funding for a boiler replacement?

If you want to apply for a boiler replacement grant, the first thing you’ll need to do is find an MCS-certified installer who can do the work. MCS is a standards organisation for low carbon products and installations.

You can contact installers through the MCS website and the government recommends getting quotes from several contractors.

Your installer will be able to explain the benefits of the different boiler replacement options and which one is most suitable for your property.

Three steps to claiming your grant

Once you’ve found an installer, decided which heating system you want, and agreed a quote, you’ll need to follow these steps:

  • the installer will apply for the grant, the value of which will be taken off the final price you pay
  • you’ll be contacted by Ofgem and you’ll need to confirm that the installer is working on your behalf
  • once installation is underway, Ofgem might contact you or request to visit the property

Eligibility criteria

To benefit from the boiler upgrade scheme grant, your new heating system needs to meet the following criteria:

  • the heating system must have been installed after 1 April 2022
  • it needs to meet the heating and hot water requirements of your property
  • it must have replaced an existing oil, gas, or electric heating system
  • it must meet minimum efficiency requirements and other technical standards that your installer will know about

Could boiler replacements help landlords combat the cost of living crisis?

The costs of many essentials such as food, petrol, and energy have increased significantly in recent months, known as the cost of living crisis.

Landlords are likely to have been paying close attention to the costs of household energy prices. In April, the energy price cap increased for approximately 22 million households and is set to rise further in October.

The government recently announced a £15 billion support package which will see every household get a £400 energy grant, while replacing an old gas boiler with a greener alternative could also help to reduce energy costs.

According to GreenMatch, a heat pump could reduce annual energy bills by more than a quarter (26 per cent) compared to a new gas boiler. Read more about the running costs and performance of heat pumps.

Landlords who offer bills-included tenancies could make significant savings on bills if their properties used less energy.

On the other hand, landlords who don’t pay for their tenants’ energy bills could still benefit from reducing energy consumption. Tenants may be willing to stay longer or pay slightly more rent if they know their monthly energy bills will be lower.

Landlords wait for news on changes to EPC regulations

Replacing an old boiler with a greener alternative could increase the energy efficiency of a property, helping landlords to comply with Minimum Energy Efficiency Standards (MEES).

Currently a property can’t be let to tenants unless it has an EPC rating of E or above.

Although it’s not been confirmed, the government is expected to increase the minimum EPC rating for rental properties to C for new tenancies in 2025 and existing tenancies in 2028.

A Simply Business survey of almost 600 landlords found that over half of landlords would need to improve their property’s energy efficiency if the minimum EPC rating was increased to C.

Of these, one in five (19 per cent) said they’d have to spend over £10,000 on improvements, with a further 27 per cent anticipating costs of £5,000 and £10,000.

Meanwhile, almost a third of landlords (32 per cent) say making properties energy efficient is a key challenge in 2022.

Will you be using the boiler upgrade scheme? Let us know in the comments below.

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