Air Source Heat Pump Installation Cost

(This page is all about air source heat pumps and how much they cost to retrofit into an existing home. Ground source heat pumps and new-build installations are not covered on this page.)

Over 95% of homes have central heating in the UK, and 78% of these are powered by gas, which releases carbon dioxide into the atmosphere when burned.

As of 2021, over 15% of the UK’s total carbon dioxide emissions come from domestic heating and in an effort to meet obligations, the government has now targeted this industry with reform.

From 2025, the government will ban the installation of gas boilers in new homes, and it’s safe to assume that this ban will be extended to existing homes at some point.

Industry experts are touting heat pumps as the most economical way to heat homes, and air source heat pumps are widely considered the best option for retrofitting into an existing home.

On this page, I’ll answer the following questions:

But how much does an air source heat pump cost to install?

How much do the parts cost?

Are they viable? Do they work when retrofitted?

What savings can you expect?

Do they work in cold weather?

Air source heat pumpHow Much Does it Cost to Install an Air Source Heat Pump?

In 2021 I contacted six heat pump installers from various locations around the UK and asked them how much it typically costs to install a system to a two-bed terraced home and a 3-bed semi-detached home.

I explained that I was conducting pricing research and that I couldn’t reference or promote their businesses within my publication as it could influence the prices they gave me.

All six provided me with an average price for the installation of an air source heat pump system.

Below is the average of the six prices.

Small 2-bed air source heat pump system£8000 inc VAT
Standard 3-bed air source heat pump system£9100 inc VAT
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How Much Do The Materials Cost?

As part of my research, I looked into the materials needed for a typical installation to a 2-bed terraced property.

A 5kw air source heat pump system comprising the main unit, cylinder, expansion tank, pump, filter etc., costs around £5000 inc VAT. A 5kw unit is the smallest suitable for a two-bed home. However, some 2-bed dwellings may require a more powerful system; it all depends on the efficiency of the building, the insulation, type of windows and wall construction, etc. must all be calculated.

I know from my research that the radiators in my own home are sized for a system that produces very hot water (from my gas boiler system). Unfortunately, air source heat pumps produce cooler water, so I need different radiators with more surface space to heat my rooms. New radiators cost around £100 each, and I would need 7, so for my property, there would be an added cost.

I sourced prices from:

The Underfloor Heating Store

Easy Heat Pumps

Electric Heat Warehouse

(don’t forget to budget for the new cylinder if you search these sites for prices)

Can Air Source Heat Pumps Be Retrofitted? Do They Work?

Based on my research in 2021, I believe that air source heat pumps can be retrofitted to most homes, and they are viable and do work but:

  • They work best with underfloor heating systems as these use water at lower temperatures.
  • If your property has standard radiators, you’ll probably need to upgrade them to sightly larger ones with more surface area (doubles instead of singles, for example).
  • You should upgrade your home’s insulation and windows if you haven’t already.
  • The unit must be fitted outside; it’s the size of an air conditioning fan and is somewhat noisy, so it should be located away from bedroom windows.

How Much Money Can a Heat Source Pump Save?

This depends entirely on the system it replaces.

Oil-powered heating systems are inefficient and costly, so you’ll save the most if you switch from one of these.

Old electric storage heating systems require a lot of electricity, and you can make a huge saving by replacing one with an air source heat pump.

You’ll make the least amount of savings if you swap a mains-gas system with an air source heat pump. This is because the new system requires electricity to run.

Air source heat pumps typically output 2-4 units for every 1 unit of electricity they use. This makes them a viable alternative to expensive electric and oil systems but the cost to run the system is slightly less than that of an older gas boiler (mains supplied) as of 2021.

If your current gas boiler is modern and A+ rated, you may find your heating bills are slightly more expensive with an air source heat pump/

Also, if your oven and hob are gas-powered, you’ll pay more should you swap them for electric units as electric costs more than gas. Of course, you could keep your gas supply, but you’ll still have to pay for the gas used in the oven/hob and daily standing charges.

Do Air Source Heat Pumps Reduce CO2 Emissions?


While air source heat pumps require electricity to run, they output 2-4 units for every 1 unit of electricity they consume, so they significantly reduce the amount of CO2 emitted compared to oil, direct electricity or gas-powered systems.

How Do Air Source Heat Pumps Work?

They use electricity to power an external fan that blows air over a very cold refrigerant that has a low boiling temperature, meaning it turns to a warm gas at low temperatures. The system then uses more electricity to pump the warm gas through a compressor, increasing its heat and density. The hot gas emitted from the compressor is then used to heat water or air via a heat exchanger. As the heat is extracted from the gas, it cools and turns back to cool liquid, and the process can then repeat.

It’s worth noting that air source heat pumps do use electricity, but they produce less CO2 than other systems because this electricity is used to extract heat from the air.

Do Air Source Heat Pumps Work During Cold Weather and in Winter?

Yes, these systems can work in temperatures below 15degrees.

Air source heat pumps don’t pump air directly into the home, they are designed to warm up a liquid refrigerant, turning into a slightly warm gas with a low density. The compressor then condenses this gas, increasing its temperature.

Air source heat pumps use more electricity in winter, but they are still more efficient than traditional heating systems.

Can a Heat Pump be Connected to a Traditional Hot Water Cylinder?

In most cases, no.

Air source heat pumps work at lower temperatures, so they require a longer coil inside the cylinder.

In almost all cases, an old, traditional cylinder would need to be replaced with one designed specifically for use with an air source heat pump system.

Comparing Air Source Heat Pumps to Ground Source Heat Pumps

The two systems work on the same principle, but ground source heat pumps are placed under the ground in the garden. There are two systems to choose from:

  • A vertical system that is piled deep into the ground.
  • A horizontal system that is much shallower but takes up more horizontal space.

Both systems are more efficient than an air source heat pump but cost substantially more, often tens of thousands of pounds. Both also require significant excavation of the garden and planning.

The Bottom Line

Air source heat pumps aren’t cheap to install, especially when retrofitted to an existing home that has older radiators and lacks underfloor heating.

Financial savings are only possible if the system replaces electric storage, oil or older gas boilers but they do produce less CO2 than any other legacy system.

Air source heat pumps are most suited to homes that are off the gas grid as these are more expensive to heat and there’s more potential to save money and reduce emissions.

They can also benefit new-build homes as it’s cheaper to install a new system than retrofit one.

Air to water systems (those that heat water) qualify for the Renewable Heat Initiative which is a government-backed scheme designed to reward those who use renewable energy in their homes.

This system is set to close to new applicants on the 31st March 2022.

More information about the scheme can be found on the government website.

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