Abstract: A heat pump system for a building provides space heating or cooling, together with a supply of hot water available in both the heating and cooling seasons or when the building space is neither heated nor cooled. The system is also versatile in that it can be readily accommodated to new construction (forced air systems) or to the retrofitting of existing buildings, the majority of which are fitted with convection type hot water radiators. These results are achieved by a refrigerant circuit that includes three heat exchangers (12, 15, 16), one (12) linked to a heat source (10), one (15) to a forced air system including a blower (17) and the third (16) to a hot water circuit (40-49) that supplies heat to the radiators (47) and to a hot water tank (41). A reversing valve (13) in the refrigerant circuit and a two way valve (42) in the hot water circuit enable selection of one of several operating modes, i.e.