EPC Improvement Grant Schemes for Landlords: ECO4, BUS, GBIS and HUG2

Four major energy-efficiency grant schemes operate in 2026 with at least partial landlord access: the Energy Company Obligation 4 (ECO4), the Boiler Upgrade Scheme (BUS), the Great British Insulation Scheme (GBIS), and the Home Upgrade Grant 2 (HUG2) along with its various successor frameworks. Each scheme has its own eligibility framework, grant amounts, application path, and landlord-access route; understanding the structure helps landlords select the right scheme (or combination of schemes) for each property. This guide walks through the four schemes in detail, with the tax-side treatment of grants received and the practical sequencing for portfolio retrofit programmes.

For the broader MEES compliance position (current EPC E floor under SI 2015/962, prospective EPC C trajectory), see our companion page on EPC C 2030 and the landlord spending cap. For the wider RRA 2025 framework, see our tax implications page.

The Four-Scheme Landscape

The schemes are not interchangeable; each targets a different combination of property type, tenant circumstance, and improvement measure. The summary picture:

Scheme	Primary target	Typical grant size	Landlord access	Status (2026-05-24)
ECO4	Low-income / vulnerable households + low-band properties (E, F, G)	£5,000-£25,000 per property	Via tenant eligibility OR LA Flex route	Operating; successor scheme TBC after March 2026
BUS	Heat-pump installations replacing fossil-fuel heating	£7,500 per installation	Direct landlord access	Operating through 2028
GBIS	Insulation measures in EPC D / E / F / G properties	£500-£3,000 per measure	Direct landlord access (council tax bands A-D for general eligibility)	Operating through 2026 budget cycle
HUG2 / successor	Off-gas-grid homes; whole-house retrofit	Up to £25,000 per property	Via local authority delivery	HUG2 ended March 2025; successor under Warm Homes Plan

ECO4: Supplier-Funded with Two Landlord Routes

ECO4 is the fourth iteration of the Energy Company Obligation, a regulatory mechanism requiring major energy suppliers (the "Big Six" plus several smaller suppliers) to fund energy-efficiency measures in low-income and vulnerable households. The scheme runs broadly from April 2022 through March 2026; successor scheme status is to be confirmed.

Eligibility Pathways

Two main pathways unlock ECO4 funding for landlord-owned properties:

• Tenant-eligibility route (HHCRO): the Help to Heat group covers tenants on specified benefits (Universal Credit, Pension Credit, income-related ESA, JSA, working tax credit with disability premium, child tax credit). Where the tenant qualifies and lives in a property with EPC band D, E, F, or G, the supplier can fund works to the landlord's property.
• LA Flex route: local authorities can set their own eligibility criteria within ECO4 rules. Typical LA Flex criteria include EPC band E / F / G properties regardless of tenant income, or households in defined fuel-poverty areas. LA Flex eligibility varies sharply by council; check the council's energy or sustainability team for current rules.

Funded Measures

• Whole-house retrofit (typical £15,000 to £25,000): combination of insulation, double-glazing, heating upgrades.
• Single-measure interventions: solid wall insulation, loft insulation, room-in-roof insulation, hot water tank insulation, heating control upgrades.
• First-time central heating installation: where the property has no central heating and the tenant is in fuel poverty.

The scheme is supplier-led: the supplier (or their delivery partner) typically initiates contact with eligible tenants and arranges the works. Landlords can also proactively contact suppliers' eligibility teams to enquire about coverage for specific properties.

Boiler Upgrade Scheme: £7,500 Per Heat Pump

BUS provides a fixed grant of £7,500 for installing an air-source heat pump (ASHP) or ground-source heat pump (GSHP) to replace a fossil-fuel heating system. A £5,000 grant is available for a biomass boiler installation, restricted to rural off-gas-grid properties. The scheme is operated by Ofgem under the Boiler Upgrade Scheme (England and Wales) Regulations 2022.

Eligibility

• Property must have an EPC issued within the last 10 years and the EPC must not list "loft insulation" or "cavity wall insulation" as outstanding recommendations (unless an exemption applies).
• The installer must be Microgeneration Certification Scheme (MCS) certified for the installation type.
• The property must not be a new build (defined as having received its first occupancy certificate within the past 12 months).
• The system being installed must meet the technical specifications (heat output capacity matched to the property's heat demand; minimum efficiency thresholds; appropriate flow-temperature design).

Application Process

1. Landlord selects an MCS-certified installer.
2. Installer designs the system, prepares the quote, and applies for BUS voucher on the landlord's behalf.
3. Voucher is issued (typically within 4-6 weeks).
4. Installation proceeds; installer claims the grant from Ofgem after commissioning.
5. Landlord pays the installer the net amount (gross invoice minus £7,500 grant).

Great British Insulation Scheme: Insulation Measures in Sub-C Properties

GBIS (formerly ECO+) targets insulation measures in properties in EPC bands D, E, F, or G. The scheme operates alongside ECO4 and is funded through the same supplier-obligation framework. The eligibility population is wider than ECO4 (no requirement for tenant low-income status under the general route) but the funded measures are typically lower-cost.

Eligibility

• General Group: properties in council tax bands A, B, C, or D in England, or A, B, C, D, or E in Scotland and Wales, with EPC band D, E, F, or G.
• Low-Income Group: households on specified benefits (similar list to ECO4 HHCRO), regardless of council tax band.

Funded Measures

• Loft insulation (typical grant £400-£800 per property)
• Cavity wall insulation (£500-£1,200 per property)
• Room-in-roof insulation (£800-£2,500 per property)
• Solid wall insulation (£3,000-£15,000 per property; often partial funding only)
• Pipe insulation, tank insulation, draught-proofing (£100-£300)

GBIS is supplier-led similar to ECO4. Landlords can engage suppliers directly to discuss property eligibility or work through the local authority's GBIS contact point.

HUG2 and the Warm Homes Plan Successor

HUG2 was the second phase of the Home Upgrade Grant, focused on off-gas-grid homes (typically rural properties heated by oil, LPG, electric, or solid fuel) in EPC bands D, E, F, or G. Phase 2 ran broadly to March 2025.

Current Status

The Warm Homes Plan (announced 2024) is the broader policy framework intended to consolidate HUG, ECO, GBIS, and BUS into a single delivery architecture. Some HUG2 carry-over delivery continues through local authorities; some new applications transition into Warm Homes Plan funding. The transition is uneven across the country: some local authorities have transitioned cleanly to Warm Homes Plan procurement, while others have residual HUG2 capacity through 2026.

Landlord Access

Off-gas-grid landlords with EPC D-G properties should:

1. Contact the property's local authority sustainability or energy team to confirm current scheme availability.
2. Ask specifically about HUG2 carry-over, Warm Homes Plan procurement, and any local supplementary scheme (some councils run their own complementary funds).
3. Where multiple routes are available, sequence applications by deadline (HUG2 carry-over typically has the shorter window).

Tax-Side Treatment of Grants Received

Energy-efficiency grants received by landlords have a consistent tax-side framework across the schemes:

Not Treated as Rental Income

Grants are not income to the landlord. The HMRC general principle is that a grant matched against specific expenditure reduces the cost of that expenditure rather than constituting income. Grant receipts are excluded from rental income calculations.

Reduce CGT Base Cost

Where the underlying expenditure is capital (which most energy-efficiency installations are, particularly heat pumps and solid wall insulation), the grant reduces the addition to the CGT base cost. For a £15,000 heat-pump installation that receives a £7,500 BUS grant:

• Gross capital cost: £15,000
• Grant received: £7,500
• Net cost to landlord: £7,500
• Addition to CGT base cost on eventual sale: £7,500 (the net cost, not the gross cost)

Reduce Revenue Deduction (Where Applicable)

For revenue-side spend (rare for energy-efficiency but possible for like-for-like replacements such as a same-spec boiler refresh with grant funding), the grant reduces the deductible expense in the year of receipt. If the gross cost was £3,000 and a £1,500 grant was received, the deductible expense is £1,500 (net).

VAT Position

The 0% VAT rate on energy-saving materials and installations (in force from April 2022 to broadly March 2027 under VATA 1994 Sch 7A Group 2 as amended) means most energy-efficiency installations carry no VAT. Where 5% reduced-rate VAT applies (some measure types outside the 0% scope), the VAT is part of the gross cost and is reduced by the grant in the same way as the underlying spend.

Scheme Stacking and Sequencing

The schemes are designed to be complementary but not redundant. Stacking rules vary:

• ECO4 and GBIS: cannot stack on the same measure (the supplier funds one route or the other for each measure). Can stack on different measures within the same property (ECO4 for insulation, GBIS for additional insulation in a different part of the building).
• BUS and ECO4: can stack where BUS funds the heat-pump install and ECO4 funds insulation work. Stacking requires the schemes to fund distinct measures; double-counting the same installation across two schemes is not permitted.
• BUS and GBIS: similar; can stack across distinct measures.
• HUG2 / Warm Homes Plan and other schemes: typically operate as a single-scheme route per property; check the specific local-authority terms.

Sequencing for a Whole-House Retrofit

For a portfolio landlord undertaking a whole-house retrofit of a single property (typical scope: insulation, double-glazing, heat-pump heating, smart controls), the sequencing typically runs:

1. EPC assessment. Obtain a current EPC and identify the works needed for the target band uplift.
2. Insulation first (GBIS / ECO4): insulation measures reduce the heating demand and inform the heat-pump sizing.
3. Heat-pump system (BUS): design heat pump to the post-insulation heating demand; install with the £7,500 BUS grant.
4. Smart controls and final commissioning: typically self-funded; small cost; not grant-eligible in most schemes.
5. New EPC post-completion: commission to record the band uplift on the EPC register.

Application Pitfalls and Common Errors

• EPC out of date. Most schemes require an EPC issued within the last 10 years. A 2014-issued EPC may need refresh before application. EPC refresh takes 1-2 weeks and costs £60-£120.
• MCS installer not certified for the specific measure. BUS requires the installer to be MCS-certified for the specific installation type (ASHP, GSHP, biomass). Generic MCS membership does not suffice. Confirm certification before signing the installer contract.
• Outstanding insulation recommendations. BUS requires that the EPC does not list loft or cavity wall insulation as outstanding recommendations (unless exemption applies). Address insulation gaps before applying for BUS, or apply for the insulation work first under ECO4 / GBIS.
• Tenant consent forgotten. Some schemes require tenant consent as part of the application; engaging the tenant early avoids delays.
• Listed buildings or conservation area constraints. Planning permission may be needed for external works (heat-pump units, solid-wall insulation cladding); the scheme funding does not override planning requirements.
• Property type out of scope. New builds (occupied within the past 12 months) are typically out of scope for BUS; certain non-domestic-classified buildings may be out of scope for the domestic schemes.

Worked Example: Whole-House Retrofit Across Three Properties

To illustrate how scheme selection and sequencing work in practice, consider a portfolio of three properties undertaking energy-efficiency upgrades during 2026.

Property A: 1930s Semi at EPC F

Solid wall construction, single-glazing, gas combi boiler installed 2008, loft insulation in place but partially compressed. Tenant is on Universal Credit (qualifies for ECO4 HHCRO).

Measure	Gross cost	Scheme	Grant	Net to landlord
Solid wall insulation (external)	£14,000	ECO4 HHCRO	£14,000	£0
Loft insulation top-up	£600	ECO4 HHCRO	£600	£0
Air-source heat pump	£12,000	BUS	£7,500	£4,500
Double glazing upgrade	£4,500	None	£0	£4,500
Total	£31,100		£22,100	£9,000

EPC outcome: F to C / B. CGT base-cost addition: £9,000 (net spend; grant receipts reduce the addition). MEES position: well within the £3,500 cap (£0 spend on insulation; £4,500 on heat pump but the heat pump alone takes the property above EPC E so the cap is not triggered as a binding constraint).

Property B: 1970s Flat at EPC D

Cavity wall construction, double-glazing already in place, electric storage heaters. Tenant is a working professional (no benefit eligibility). Property is in council tax band C.

Measure	Gross cost	Scheme	Grant	Net to landlord
Loft insulation	£600	GBIS (general)	£600	£0
Cavity wall insulation top-up	£800	GBIS (general)	£800	£0
Air-source heat pump	£10,500	BUS	£7,500	£3,000
Total	£11,900		£8,900	£3,000

EPC outcome: D to B. CGT base-cost addition: £3,000.

Property C: 2000s Townhouse at EPC C (Already Compliant)

No grant-funded upgrade needed; the property already meets the current MEES floor and the prospective EPC C target.

Portfolio Summary

Net spend across three properties: £12,000. Total grant receipts: £31,000. EPC band uplift on two of three properties (third already compliant). CGT base-cost additions sum to £12,000.

The grant-funded sequencing meaningfully changes the economics: properties that would otherwise have been uneconomic to upgrade (Property A with £31,100 gross cost) become viable at £9,000 net spend. Without grant access, the same retrofit programme would have cost £43,000 across the two properties; with grants, it cost £12,000.

Application Sequencing Across Multiple Properties

For portfolio landlords planning upgrades across multiple properties, sequencing across schemes and properties has cumulative budget impact:

1. Portfolio EPC audit (Month 1): pull current EPC for each property; identify the band and the recommended-improvement-list.
2. Tenant-eligibility assessment (Month 1): identify tenants whose status may unlock ECO4 HHCRO funding. Engage with tenant on consent and information-sharing.
3. LA Flex review (Month 1): contact each property's local authority to confirm current LA Flex eligibility criteria and any local-supplementary funding.
4. Installer selection (Month 2): select MCS-certified installers for BUS-eligible heat-pump installations; insulation contractors with experience of ECO4 / GBIS process.
5. BUS applications (Months 2-3): sequence BUS voucher applications across the portfolio. BUS is the most landlord-friendly route and provides early certainty of grant amount.
6. ECO4 / GBIS applications (Months 3-6): work with the chosen supplier or LA Flex contact to process insulation funding.
7. Installation phase (Months 4-9): staggered installations, with insulation typically completing before heat-pump installation (the heat pump sizing depends on the post-insulation heat demand).
8. Post-installation EPC reassessment (Month 10): commission new EPCs to record the band uplift and update the property's compliance file.

The Grants Position in One Line

Four schemes operate with partial landlord access: ECO4 (supplier-funded, tenant-eligibility or LA Flex routes), BUS (£7,500 per heat pump, direct access, the most landlord-friendly), GBIS (insulation measures in council-tax-band A-D properties at EPC D-G), and HUG2 / Warm Homes Plan successor (off-gas-grid, local-authority delivery). Grants do not count as rental income; they reduce the CGT base cost of the underlying capital expenditure. The most effective portfolio approach combines targeted use of each scheme for the measures it best funds, sequenced around the MEES compliance position and the prospective EPC C trajectory.