Heat Pump for a Terraced House

Estimate the Saving for a Terraced House

Heat Pumps in Terraced Houses: Small Heat Loss, Tight Space

A mid-terrace has neighbours on both sides, so only the front and back walls face the outside. Our model counts no heat lost through the party walls, which is why a terrace comes out smaller than a semi or detached house of the same floor area.

We work on about 7,200 kWh of heat a year for a 2-bed home, heating and hot water together. That's DESNZ's median gas use for 2 bedrooms in England and Wales, put through a 90% boiler, and it's the figure the calculators on this site use. It's an average, not a measurement of your house. Only a room-by-room heat loss calculation settles it, and an MCS installer has to do one to size the heat pump.

What a terrace may lack is room: a side passage, a garden big enough to put the unit away from the windows, a cupboard for a cylinder. Those are the things to check first.

Mid-Terrace vs End-of-Terrace: The Difference Matters

An end-of-terrace has one shared wall, like a semi, so it loses more heat than the same house in the middle of the row. Our model treats it as a semi: the 70 sq m 1930s terrace needs about 5.8kW on the end of the row against 4.0kW in the middle. If yours is on the end, choose "semi" in the size calculator below.

The end house may have a side wall or passage for the outdoor unit. If that side faces a road, the unit can't go above the ground floor on that wall in England, and in a conservation area it can't go on that wall at all.

What Size Heat Pump Does a Terrace Need?

We ran four terraces through the same heat loss model as our size calculator (standard RdSAP assumptions, a -5.1C design day in the Midlands):

If a quote for an ordinary 2-bed terrace comes in much bigger than this, ask to see the heat loss calculation behind it. Put your own house in here:

The Outdoor Unit: Where Does It Go?

The outdoor unit can go on the ground or on a wall, and it needs some space around it for air to flow. In a terrace with no side passage, that means the back yard, the garden or a back wall. Ask the installer where the pipes will run between the unit and the cylinder before you agree a spot.

The rules in England, for a heat pump to count as permitted development:

• One unit. Only one air source heat pump is allowed on a house that isn't detached.
• Size. The outdoor unit, including any housing, can be up to 1.5 cubic metres.
• The front. Outside a conservation area it can go on a wall that faces the road, but only at ground floor level.
• No boundary rule. Until 29 May 2025 it had to be at least 1 metre from your boundary. That rule has gone, which matters in a narrow yard.
• Siting. It has to be placed, so far as practicable, to keep its effect on the look of the building and on the area to a minimum.

Wales changed its rules from 1 June 2026, with the same 1.5 cubic metre limit and the MCS 020 a) noise standard. In Scotland and Northern Ireland the older MCS 020 standard still applies, so check the local rules there.

Noise and Your Neighbours

For permitted development in England the heat pump has to come in at or under 37 dB at the assessment position: 1 metre outside the middle of your neighbour's nearest door or window to a habitable room, worked out with the MCS 020 a) method. In a terrace that window can be close.

The yard matters too. Under MCS 020 a), each hard surface close to the unit (the back wall of the house, a yard wall) raises the figure, because sound reflects off it. A solid barrier between the unit and the window brings it down. That means a solid brick or masonry wall, or a solid fence at least 18mm thick, extending at least 1 metre past each side of the unit. It takes 10 dB off if it hides the unit from the window completely, and 5 dB if it partly hides it.

Ask each installer for the unit's sound power level (not its low noise mode figure), which is what the calculation starts from, and for their worked MCS 020 a) result at your neighbour's window. Try your own layout here:

If the whole street gets them, Nesta had Apex Acoustics model terraced and semi-detached streets in 2024, with every heat pump at the old 42 dB limit and worst-case assumptions throughout. Several heat pumps came out 2 to 8 dB louder than one, most in gardens without fences, and the study didn't count that as a significant increase. Putting the unit near a fence rather than in the middle of the back wall cut 1 to 3 dB in its modelling.

Where the Hot Water Cylinder Goes

A standard air source heat pump doesn't give you hot water on demand the way a combi does, so you need a way to store it. The Energy Saving Trust says a hot water cylinder can usually fit in a cupboard of at least 80cm by 80cm, and its size depends on how much hot water you use.

If a combi replaced your old cylinder, look at where the airing cupboard used to be, or any cupboard about that size, and ask the installer whether it'll take one.

If there's no room, the Energy Saving Trust lists other options: a heat battery, which takes up less space than a cylinder; an instantaneous water heater under the kitchen sink for smaller amounts of hot water; or a hybrid, where the heat pump heats the house and a boiler does the hot water. A hybrid can't get the Boiler Upgrade Scheme grant, though, so we'd ask about a heat battery first.

No Outdoor Space at All?

The Energy Saving Trust says compact heat pumps, made for small, well-insulated homes, need only a cupboard of around 80cm by 80cm near an outside wall. It also suggests an air-to-air heat pump. Those normally have an outdoor unit too, but the EST describes all-in-one air-to-air units that sit entirely indoors and reach the outside air through two small ducts in an outside wall. The Boiler Upgrade Scheme lists £2,500 towards an air-to-air heat pump, though no installer could claim it yet when we checked in September 2026, and most air-to-air systems don't provide hot water. Our air-to-air guide covers them.

With no outside space at all, we'd ask an installer about a compact heat pump in a cupboard first, because it does your hot water too. If that won't fit, an indoor air-to-air unit for the main rooms is the realistic option, with an immersion or electric shower for hot water.

Do You Need to Insulate First?

Not for the grant: the Boiler Upgrade Scheme dropped its insulation condition on 8 May 2024, and since 28 April 2026 you don't need a valid EPC either. It's still worth doing the cheap jobs, because they let the heat pump run cooler and cheaper.

The loft

The Energy Saving Trust puts a bare loft taken to 270mm at £750 for a typical home in Great Britain, and topping up from 120mm at £600. It no longer publishes a figure by house type, so treat that as a typical home's price rather than a terrace's.

Cavity walls

If your terrace has unfilled cavity walls, the Energy Saving Trust puts filling them at around £2,200 for a typical home in Great Britain, again with no house-type figure.

Solid walls

Internal or external wall insulation is the expensive one, and you may not need it. The Energy Saving Trust puts it at around £12,000 internal and £15,000 external for a 3-bed semi, and doesn't publish a terrace figure. Scaled by wall area, our estimate for a mid-terrace is about £6,500 and £8,000. In our Victorian example, the loft, double glazing and a capped chimney take the heat loss from 8.7kW to 4.4kW with the walls left solid. Our heat pumps in old houses guide goes through it.

Radiators: Check Before You Assume

Heat pumps run at lower flow temperatures than gas boilers: 35C to 55C, against the 70C to 80C a gas boiler supplies. At those temperatures some radiators are too small, and your installer should work it out room by room.

Our estimate for a small, well-insulated terrace is 0 to 3 radiators upgraded, at £150 to £400 each, so up to £1,200. Our radiators guide has a checker for each room.

Planning Permission

In England a heat pump on a terrace is permitted development, so you won't need a planning application, if it meets the rules above. That's one unit, no bigger than 1.5 cubic metres, 37 dB or less at your neighbour's window, not above the ground floor on a wall facing the road, and the house isn't listed. In a conservation area it can't go on a wall or roof facing the road, or anywhere closer to the road than the house itself. Councils can also remove permitted development rights with a planning condition or an Article 4 direction, so check if you're not sure.

If yours does need an application, most are approved. Nesta analysed 14,202 residential heat pump applications in England, Wales and Scotland from 2015 to March 2026 (published September 2026). 83% were accepted and under 7% refused. That held across house types: approval rates ran from 80% to 90% and refusals from 5% to 13%, with mid-terraces the most likely to be refused. Where the heat pump was relevant to a refusal, noise was the most common reason. A BS4142 sound assessment, which a council may ask for, cost £1,000 to £2,000 in Nesta's figures.

What It All Costs

Heat pump costs are the DESNZ median for each size (Boiler Upgrade Scheme statistics, 2025/26 installs by capacity). Real quotes spread either side of the median.

Add up to £1,200 if radiators need upgrading (our estimate), and the insulation costs above if you do them first. Treat the radiators as a possible extra rather than a certain one: DESNZ's costs are installers' own reported figures for the system, labour and VAT, and DESNZ doesn't say whether radiator work is in them. It also notes installers may differ on whether the figure includes the grant.

Running Costs

At the 1 October to 31 December 2026 cap (26.32p a kWh for electricity, 7.97p for gas) and a SCOP of 3.5, on 7,200 kWh of heat:

• Heat pump, standard tariff: about £540 a year
• Heat pump, heat pump tariff: about £410 a year, at our estimate of a 20p blended rate
• 90% gas boiler: about £640 a year

That puts the heat pump about £100 a year ahead on a standard tariff and £230 on a heat pump tariff. Those are fuel costs only. If you have the gas supply disconnected altogether, you also stop paying about £108 a year of gas standing charge. The savings calculator above counts that standing charge in your gas bill, so its saving (and its payback against a new boiler) comes out bigger than these fuel-only figures. Our heat pump tariff guide compares the tariffs.

We'd fit one when the boiler is dying anyway. As an investment on its own the sum is slow, but at that point you're comparing the heat pump with the £2,750 we allow for a new combi, not with nothing. On that basis the 1930s terrace's heat pump costs about £1,250 more, which the saving pays back in about 13 years on a standard tariff, or 5 on a heat pump tariff, on fuel alone. Count a heat pump's dearer servicing (about £70 a year) and it's about 8 years on a heat pump tariff, and past the heat pump's life on a standard one.

The Bottom Line

Ask yourself:

• Is there room for the unit in the back yard or garden, or on a back wall?
• How close is your neighbour's nearest window to that spot, and is there a solid wall or fence in between?
• Is there a cupboard of about 80cm by 80cm for a cylinder?
• Is your loft insulation at 270mm or more?
• Is your boiler more than 10 years old?

If the answers on space are yes, a terrace is a small heat pump job: a small unit, few radiator changes, and a grant that covers most of the gap to a new boiler.

More: Heat pump noise and the 37 dB rule | How the £7,500 heat pump grant works | Heat pumps in semi-detached houses