However, the announcement comes alongside the decision to end ECO4, the Energy Company Obligation scheme. ECO4 has been the UK’s primary mechanism for funding insulation and heating upgrades for low-income and vulnerable households, with costs met by energy suppliers. Its closure in March 2026 leaves the Warm Homes Plan as the main remaining route for government-backed support, although key details on eligibility and access are still being worked through.
Making the switch to heat pumps easier
The Boiler Upgrade Scheme (BUS) has been expanded to offer £2,500 off the cost of installing air-to-air heat pumps, which provide both heating in the winter and cooling in summer – the first time that air-conditioning units have been eligible for funding.
Households will also be able to claim £2,500 off the price of heat batteries, which can store heat overnight for use during the day.
The UK Government states that the typical cost of installing an air-to-air heat pump in a flat or small house is around £4,500, meaning the grant can cover most of the upfront cost.
In our response to the consultation on the BUS in June 2025, Propertymark supported funding for air-to-air heat pumps and other electric heating technologies; however, we want to see the UK Government go further so that grants cover at least 80% of installation costs, with means testing available to support those in greatest need.
Lessons from past energy-efficiency challenges
Funding alone does not guarantee quality improvements. Propertymark previously raised concerns that an estimated 65,000 homes may have been left at risk due to poor solid-wall insulation work installed under past schemes, thus highlighting the risks of relying on unvetted installers or rushed retrofit programmes.
Without stronger oversight, training and consumer protections, the Warm Homes investment could repeat earlier mistakes, potentially leaving landlords to correct defective work at their own cost. Agents will need confidence that installers are competent and that guarantees or warranties are in place before recommending upgrades to clients.
Challenges for the private rented sector
Tenants continue to face high energy costs, and landlords are grappling with inflation, increased taxation, maintenance spending and uncertainty over future energy-efficiency regulation. While additional funding through the Warm Homes Plan may assist with upgrades, the end of ECO4 raises questions over how accessible support will be, particularly for private landlords who have found previous grant schemes inconsistent or difficult to navigate.
The real benefits will depend on how funding is delivered at the local level and whether application routes are straightforward for private rented homes.
Fitting with wider reforms
The Warm Homes allocation arrives alongside broader policy shifts affecting the whole housing sector. In June, the UK Government committed £39 billion for social and affordable housing, and the Renters’ Rights Act 2025 will begin to take effect from May 2026.
At the same time, the private rented sector continues to anticipate that more demanding energy performance expectations will be forthcoming, although the timeframes remain unclear.
For agents, this mix of ambition, uncertainty and shifting funding signals that energy standards are becoming central to professional practice, even before any regulatory changes are finalised.
What letting agents should do
With ECO4 winding down and a new funding programme on the horizon, agents and landlords may wish to review their portfolios to identify the homes where retrofit will deliver the greatest long-term value for tenants and property assets.
Early conversations with tenants can help inform them about sustainability. Whilst due diligence around installer competence, warranties, and quality standards will be essential, given the concerns about past retrofit work.
