Free heat pumps and insulation upgrades worth up to £30,000 each as Budget promises £3.4bn to improve homes

Low-income households and renters will be able to get up to £30,000 each for home improvements from next year with a £3.4bn cash pot set aside in the Budget.

The money will go towards the Warm Homes Scheme, a Government manifesto initiative to upgrade the properties of low-income homeowners and private renters into homes with EPC grades from D to G to at least C.

In today’s Budget, Chancellor Rachel Reeves said the £3.4bn would be spent from 2025 to 2028. The Warm Homes Plan aims to upgrade 5 million homes.

Each eligible household can access £15,000 towards energy efficiency improvements and an additional £15,000 to install low carbon heating such as heat pumps.

Homeowners and tenants will not have to pay any of their own cash to improve their homes in this way.

However, homeowners will receive payment for improvements to one home under the scheme and will then contribute to paying 50 per cent of the cost of improving each additional home.

The £3.4bn figure also includes £1.8bn for proposed fuel poverty schemes to help more than 225,000 households reduce their energy bills by more than £200 a year.

The budget documents said: “The Warm Homes Plan will transform homes across the country by making them cleaner and cheaper to run, from installing new insulation to deploying solar and heat pumps.”

The money will be given to local authorities, who will then distribute it to their areas through grants.

These grants can be spent on energy efficiency improvements and low carbon heating for English homes.

Not all local authorities will take part and councils are currently deciding whether to sign up or not.

Households using any type of energy will be able to apply, including off-grid households using coal or liquefied petroleum gas.

The Government also promised to increase funding for the Boiler Improvement Scheme in England and Wales this year and next, due to “high demand”.

The Boiler Upgrade Scheme offers grants worth up to £7,500 to replace older boilers with more modern, environmentally friendly heat pumps.

Generation Rent chief executive Ben Twomey welcomed the news cautiously.

Twomey said: ‘Private renters are more likely than people with other types of tenure to face fuel poverty, so funding from Warm Homes is welcome.

“But to benefit from this, private renters need better protections against rent increases and evictions than the government is currently planning – otherwise landlords could hoard the benefits of any subsidy.”