Don't let your heat waft your money away via windows and walls

Oil prices are rising; natural gas is becoming harder and more expensive to transport and our already hefty energy bills are only going to get more expensive. The Department for Energy and Climate Change (DECC) says one in four households in the UK are facing fuel poverty, where more than 10 per cent of their annual income is spent heating their homes. Yet homes across the country are inadequately insulated, meaning many of us are paying to heat the streets. Getting the proper insulation installed may seem like a costly hassle, but shelling out now will lead to savings in the future.

If you have previously turned your nose up at changing your heating habits, think again. "The era of cheap energy is gone," says Nick Turton, a spokesman for DECC's campaign Act on CO2. "The future is between a high-carbon and a low-carbon one and we know which one we want. We've simply got to get smarter with our energy, both for our bank balances and the planet." Heat leaking out through the roofs, walls, windows, floors and doors or going unused in unoccupied rooms may not break the bank now, but the quicker you get wise to heating your home efficiently, the more money you will save in the long term.

Being more efficient with your heating system is a simple task. The main hurdle is insulating. We lose about 50 per cent of the heat produced in our homes, enough through uninsulated lofts and cavity walls to keep more than 1.6 million homes warm for an entire year. "Loft and cavity walls are the low hanging fruit in terms of big wins," says Mr Turton.

Mat Colmer, the head of housing and supply chain at the Energy Saving Trust, says walls should be number one on your insulation list. "You lose most of your heat out of your walls, 33 per cent in fact, so you can insulate on the outside, the middle and on the inside and make big savings straight away." It will cost about £250 to employ a qualified installer to fill cavity walls, which are generally found in houses built post-1920. They are made up of two layers with a gap in between; the installer will drill small holes at strategic intervals around your home and fill the gap with mineral wool, beads or granules, or foamed insulants. Compared with other insulation, filling cavity walls is cheap and comes with good savings, roughly £115 per year knocked off your energy bills allowing you to recoup your initial investment within two years.

If your house is pre-1920, you could be dealing with solid walls. Up to twice as much heat is lost through uninsulated solid walls than uninsulated cavity walls, but they are more expensive and disruptive to insulate. You can choose to insulate either externally or internally, but if you have the option, external is the more effective and cheaper way to go. However, the catch is you need to get planning permission as the insulation will change the appearance of your property. It's a big job and will involve changing guttering, window sills and other external features. But the savings are big to match: about £400 per year on your energy bills. If your property is listed, you'll have no choice but to opt for internal work. This involves either cladding internal walls with insulation backed boards or building a stud wall which is then insulated. It costs more and savings are slightly less at about £380 per year on average family energy bills. Either way, solid wall insulation is not a small job and will incur substantial upfront costs. However, initial spend now will bear fruit in the future.

Whereas walls are not really suited to even the most experienced DIYers, loft insulation is something they can get their teeth into. "Insulating your loft is massively cost effective," says Mr Colmer. "We'd say absolutely definitely do it." However, you've got to do it right. Loft insulation involves laying insulating quilts of mineral wool down between the horizontal beams that make up the floor of your attic. "You can't squash the insulation in the loft," says Mr Colmer. "You need to let the mineral wool be at its full expanse so it can do its job." Typically loft insulation will cost £250 to install professionally and will save you £150 per year, paying for itself in two years.

If you want to go the whole hog, other options are insulating the floor and getting double glazing installed. However, because they involve labour, they are costly, and compared with other areas, the heat losses through windows and floors are significantly less. If you are already having work done on your property, it is worth considering both. "Once you've already got people on site, the cost is much less," says Mr Colmer, "so get as much done in one go as you can."

Cheaper ways to conserve heat are through draft proofing and temperature control. Closing curtains when it gets dark and whipping up a few draft excluders can prevent the loss of 12 per cent of your heat. You can also save by installing individual thermostatic controls on radiators to let you set the temperature in each room. So if you are mainly in one room, you don't have to pay to heat the whole house. A reduction of one degree on your thermostat can make savings in the long term. "Savings might not be enormous now," says Jasmine Birtles, editor of consumer financial advice website moneymagpie.com, "but as per unit costs get bigger, bills will be bigger and so even the smallest reductions are going to be much more worth it."

For those who simply don't have the money to invest in keeping the heat in, there are grants to go towards the cost of insulation. The Government, local councils and energy companies run schemes for elderly and disabled people and those who receive certain state benefits. WarmFront will contribute up to £3,500 to the cost of heating improvement and insulation, but there have been reports of contractors inflating prices resulting in consumers paying more for the work, even with the grant, than they should have. So it is essential to get a range of quotes.

You can get substantial reductions on DIY and professionally installed loft and cavity wall insulation. However, grants rarely extend to solid wall insulation, leaving those with older properties out in the cold.