Boiler Upgrade Scheme and certification requirements consultation

1 Introduction
2 Part 1: Boiler Upgrade Scheme (BUS) consultation
3 Smoother more consumer-friendly process
4 Enhancing consumer protections under the BUS
- 4.1 Implications of Microgeneration Certification Scheme (MCS) reforms on the BUS
- 4.2 Grant Payments under the BUS
5 Part 2: Certification requirements for clean heat schemes consultation
- 5.1 Proposals to require the Microgeneration Certification Scheme (MCS) as the sole certification scheme for UK government clean heat schemes.
6 Next Steps Summary
7 Related articles on Designing Buildings

[edit] Introduction

The Boiler Upgrade Scheme (BUS) was launched on 23 May 2022, it supports low-carbon heating with over £328 million in grants for 49,000+ installations. After a slow start with only one third of the low-carbon heating scheme’s annual budget having been used by February 2023, the scheme has seen a gradual year on year increase. By the end of September 2024 applications reached 55,095, 12% higher than in August, by the end of January 2025, a total of 58,883 vouchers had been issued, an increase in applications, with a total of 3,661 applications across all technology types, a 29% increase compared to December 2024 and a 79% increase compared to January 2024.

[edit] Part 1: Boiler Upgrade Scheme (BUS) consultation

[edit] Stimulating further demand for the BUS

To scale up the scheme further the government consultation, which was published in at the end of April 2025 with closing date of 11 June 2025, explores third-party finance, expanding the technology that is eligible, improving consumer protection, and streamlining the regulations. The consultation invites input from homeowners, installers, finance, and energy sectors to enhance clean heat transitions and standards. The full consultation with all 31 questions of Part 1: Boiler Upgrade Scheme (BUS) and 5 questions of Part 2: Certification requirements for clean heat schemes can be viewed by visiting "Open consultation: Boiler Upgrade Scheme and certification requirements for clean heat schemes". Below is a brief summary of some of the key points.

[edit] Expanding System Eligibility under the BUS Multi-technology systems

The scheme currently supports hydronic heat pumps as the sole/main heating source, but recognises benefits in allowing them alongside other low-carbon technologies. Innovations like solar-powered hot water and heat batteries offer flexible solutions, especially for properties with constraints. The consultation explores adapting rules to accommodate diverse heating system configurations and needs. It proposes amending BUS regulations to allow heat pumps alongside other low-carbon technologies while maintaining key restrictions. Hot water-only heat pumps would remain ineligible. All additional heating must be electric, not fossil fuel-based. The heat pump must meet full space heating demand, and grants would only cover BUS-eligible technologies.

[edit] Air-to-air heat pumps

The scheme currently excludes air-to-air heat pumps (AAHPs), but due to suitability for space-constrained or non-hydronic homes, the government is considering expanding BUS to include AAHPs that provide heating (and optionally cooling) offering consumers more flexible, climate-adaptive, low-carbon heating options. AAHPs must meet MCS standards and be paired only with electric hot water systems, not fossil fuel ones. Grants would exclude commercial installations, focusing on efficient, low-carbon domestic heating replacements and ensuring minimum performance standards.

Government is researching AAHP performance and suitability in UK homes, with results expected later this year, feedback is sought to strengthen the evidence base. Some innovative AAHPs now offer both space and hot water heating, so views welcomed on how to incentivise such products—potentially through tailored eligibility criteria—to support market growth.

The government proposes a lower grant tier for air-to-air heat pumps (AAHPs), reflecting their lower installation costs—especially in small homes without hydronic systems. Estimated AAHP installation costs average £3,900. Suggested grant levels are £1,000 (covering extra cost vs. electric heaters) or £2,000 (covering over half the cost). Feedback is invited on appropriate funding levels.

[edit] Electric heating technologies

While most homes are expected to adopt heat pumps, the government acknowledges that alternatives may be needed in some cases. It is considering expanding the Boiler Upgrade Scheme to support other electric heating technologies, such as electric boilers, infrared panels, and heat batteries. These offer lower installation costs but higher running costs and lower efficiency. Heat batteries show promise, especially when used with time-of-use tariffs, though correct sizing and charging are crucial. An MCS standard for heat battery installation is in development. Ongoing research and stakeholder input will inform future eligibility and support decisions.

[edit] Third-Party Ownership agreements under the BUS

To make low-carbon heating more accessible, the government proposes allowing third-party ownership agreements—such as leases or hire purchase—alongside the Boiler Upgrade Scheme (BUS). This change would remove the current requirement for property owners to own the system outright, helping reduce upfront costs. The aim is to support more households, particularly those without savings, and encourage private financing options while maintaining consumer protections. This option would apply only to hydronic heat pumps, not other technologies like biomass boilers. Feedback is sought on appropriate safeguards and implementation.

[edit] Hire-purchase or conditional sale agreements

The government proposes enabling third-party ownership agreements—like hire purchase and conditional sale—alongside the Boiler Upgrade Scheme (BUS), allowing consumers to pay for hydronic heat pumps in instalments. These agreements, likely to be regulated under the Consumer Credit Act and overseen by the FCA, offer key consumer protections such as affordability checks, cancellation rights, and access to the Financial Ombudsman Service. This aims to improve affordability and accessibility while maintaining strong safeguards for consumers.

[edit] Hire-purchase / conditional sale agreement combined with energy tariff billed in kWh's

The government proposes allowing hire-purchase or conditional sale agreements to be bundled with an energy tariff under the Boiler Upgrade Scheme (BUS). These would remain separate contracts to preserve consumer flexibility, but could be paid as one monthly bill. Energy tariffs must be billed in kWh for transparent cost comparisons. Consumer protections from financial regulations would cover the heat pump agreement, while Ofgem rules would govern the energy tariff, ensuring users can switch suppliers without losing their heating system. This model aims to simplify payments while maintaining robust protections and choice for consumers.

[edit] Consumer hire agreement

Consumer hire agreements (leasing) differ from hire-purchase and conditional sale as the consumer never owns the heating system but pays a monthly fee to use it for a set period. These agreements over three months are regulated under the Consumer Credit Act (CCA) but have fewer protections than hire-purchase agreements, such as delayed rights to terminate and no FCA creditworthiness checks. This means leasing offers lower upfront costs but less consumer control and protection compared to ownership models.

[edit] Heat as a service agreement

‘Heat as a service’ agreements charge property owners a monthly fee based on the amount of heat produced or to maintain a set temperature, covering the heating system, maintenance, and energy. The provider owns the system throughout, with no ownership transfer to the consumer. As an emerging model, readiness in the industry is uncertain, and providers must comply with Ofgem licensing and relevant laws.

[edit] Proposed requirements on third-party ownership providers accessing BUS

This proposal to regulate third-party ownership providers under the BUS is thorough and focused on safeguarding consumers while maintaining installation quality. Key points include:

Providers must be MCS certified to guarantee high-quality installations and consumer protections related to product, installation, and service.
Providers offering third-party ownership agreements must be FCA-authorised for regulated credit activities (e.g., hire-purchase, conditional sale, hire agreements) or act as an Appointed Representative under FCA rules, ensuring compliance with the Consumer Credit Act and FCA consumer duty.
Providers solely offering consumer hire agreements would be covered by the limited permissions regime.
Providers must register with Ofgem as third-party ownership providers and submit evidence of FCA authorisation or appropriate appointed representative status.

This framework would ensure consumers entering third-party ownership agreements under the BUS have access to strong financial protections, clear regulatory oversight, and quality installation standards. It would also create a formal market structure supporting the growth of these financing options alongside government grants.

[edit] Lessons learned from previous government environmental schemes

This summary of lessons learned from prior interactions between government green home improvement schemes and third-party ownership agreements highlights key risks and consumer protection gaps. It reflects a very thoughtful and realistic approach to designing the new BUS framework with these issues in mind. Key points to note:

Mis-selling and exaggerated claims show the need for clear, honest marketing and robust oversight to prevent misleading consumers.
The disconnect between marketers and redress providers underscores the importance of accountability and accessible complaint mechanisms.
Limitations of MCS and Consumer Codes enforcement suggest a need for stronger regulatory powers or alternative enforcement pathways.
The practice of contract transfers to non-compliant providers highlights the need for strict controls on assignment or sale of contracts.
Contract terms not aligned with scheme eligibility reveals the necessity of linking contractual obligations directly to grant or scheme conditions.
Differences in consumer protections due to contract type or tenancy status indicate the framework must consider a range of property ownership and occupancy scenarios.
Issues with cost transparency and bundled contracts point to the need for clear, upfront disclosures and separated billing where relevant.
Risks of heat pump removal for non-payment and contract alterations without consent require strong consumer safeguards and contract stability provisions.
Legal complications like ownership of equipment in the property demand clear rules on rights and responsibilities, especially regarding property sales, renovations, or inheritance.
Finally, clarity on exit options and buy-out rights is essential to avoid consumers being locked into disadvantageous long-term agreements.

Together, these lessons form a vital foundation to build a consumer protection framework that prioritises transparency, fairness, and enforceability in third-party ownership agreements under BUS.

[edit] Existing Protections

Fair and transparent marketing: Legal requirements ensure communications and promotions are clear, fair, and not misleading, helping consumers make informed decisions.
Pre-contract information: Providers must supply minimum necessary information before contracts are signed.
FCA Consumer Duty: Requires firms to act in good faith, prevent foreseeable harm, and promote positive consumer outcomes with proper culture and governance.
Creditworthiness assessments: Mandatory where applicable, to prevent unsuitable lending.
Ofgem rules: Encourage suppliers to help customers switch tariffs or suppliers easily.
Contract variation rights: Legal requirements for notification and consumer consent on contract changes, including termination rights in some cases.
Termination and repossession: Statutory rights for voluntary termination exist for certain agreements; providers must follow prescribed procedures before repossession and offer forbearance for financial difficulties.
Redress mechanisms: FCA rules, Financial Ombudsman Service, and private rights of action ensure consumer complaints can be resolved effectively.
Ongoing reform: HM Treasury is committed to simplifying the Consumer Credit Act (CCA) for clearer consumer protection.

[edit] Proposed Additional BUS-Specific Conditions

Providers must be FCA authorised and hold relevant permissions for their regulated products.
Providers must be MCS certified to assure quality of installation and service.
Repossessing or remotely decommissioning heat pump systems is prohibited if payments default; instead, providers must use notices and forbearance.
Providers must supply a clear, simple contract summary covering:
- Comparison of outright purchase versus third-party ownership costs.
- Contract duration and price change conditions.
- Maintenance responsibilities and coverage.
- Procedures for contract variations, early termination, selling property, or building works.
Marketing communications must remain clear, fair, and not misleading.
Providers must undertake reasonable creditworthiness assessments as per FCA rules.
FCA retains supervisory and enforcement powers to act against wrongdoing.
Simplifying the heat pump installation journey under the BUS

[edit] Smoother more consumer-friendly process

Third-party ownership and alternative technologies under BUS are expected to increase demand.
Collaborative efforts with Ofgem and industry aim to speed up electricity network connections—including a regulatory review and £42 million investment in the Heat Pump Ready programme.
Reform to air source heat pump permitted development rights (removal of the 1-metre rule) to ease planning restrictions in England.
Acknowledgement of potential consumer journey barriers, such as:
- The need for a valid Energy Performance Certificate (EPC).
- Other scheme eligibility requirements that may deter uptake.

Invitation for views on how to simplify and streamline the installation process, making it as easy as replacing a gas boiler

[edit] Enhancing consumer protections under the BUS

[edit] Implications of Microgeneration Certification Scheme (MCS) reforms on the BUS

In June 2023, MCS proposed reforms to strengthen quality and consumer protection, including replacing CTSI-approved consumer code membership with a new MCS "Customer Commitment." This aims to offer a single complaints and dispute resolution route. Government may approve this new standard for BUS consumer protection once fully implemented and assessed.

[edit] Grant Payments under the BUS

The BUS incentivises heat pump uptake by covering upfront costs, with grants intended to be discounted from the total price at the point of sale. However, 21% of installers request full payment, reimbursing grants later, posing financial risks. Government is considering mandating upfront discounts and addressing installer cash flow issues in complex projects.

[edit] Part 2: Certification requirements for clean heat schemes consultation

[edit] Proposals to require the Microgeneration Certification Scheme (MCS) as the sole certification scheme for UK government clean heat schemes.

The Government proposes mandating MCS as the sole certification scheme for clean heat initiatives like the Boiler Upgrade Scheme, to ensure consistent quality, safety, and consumer protection. This move would remove recognition of ‘equivalent’ schemes across several programmes, aiming to reduce complexity, strengthen standards, and enhance redress mechanisms ahead of broader reforms.

[edit] Next Steps Summary

The Government will review consultation feedback and publish a response. This forms part of the broader Warm Homes Plan, backed by £3.4 billion, to improve insulation and expand low-carbon heating. DESNZ and Ofgem will continue refining the BUS scheme and digital platform, ensuring effective implementation and stakeholder engagement.