Consumer protection issues in third-party ownership models for heat pumps
Think tank: Nesta
Author(s): Richard Humphreys
June 2, 2026
This report from Nesta clarifies the nature of consumer protection risks and supports policymakers in assessing the viability of TPO models for financing heat pumps.
Private finance to cover the upfront cost of a heat pump offers a promising route to scaling the technology and addressing affordability barriers.
Third-party ownership (TPO) models, such as leasing and hire purchase, are one such approach, but remain small-scale, in part due to regulatory constraints linked to consumer protection concerns.
Nesta commissioned DWF to provide a detailed analysis of the legal framework, alongside insight into the practical operation of the asset finance market. This report clarifies the nature of consumer protection risks and supports policymakers in assessing the viability of TPO models for financing heat pumps.
The report discusses legal, regulatory, and consumer protection issues related to third-party ownership of heat pumps, emphasizing risks of repossession, affordability checks, clear information, unfair clauses, contract amendments, early termination, and insolvency impacts.
It highlights existing safeguards, potential legal uncertainties, and suggests oversight or codes of conduct to enhance consumer outcomes and industry confidence.
