Payment escrow is an arrangement where a neutral third party holds the money for a job and releases it as the work is completed – instead of the customer paying the tradesperson directly. Neither side holds the money while the work is in progress: the customer has committed it, the tradesperson hasn't received it, and it's released in agreed stages as the work gets done. That single change removes the two fears that hang over building work – the homeowner's "will I lose my money?" and the tradesperson's "will I get paid?" – because the answer to both is sitting in the escrow account.
How does escrow work step by step?
An escrow job runs in a fixed order – using Renofy's version as the example, since the details vary by provider:
- Agree the job in stages. The tradesperson and customer agree a quote broken into milestones – each with its own scope and price – before any work starts.
- The customer funds the escrow. On accepting the quote, the customer pays the full job value into escrow by bank payment. The money leaves their account before work begins, but doesn't go to the tradesperson.
- The work happens. The tradesperson completes a milestone and submits it with photos and notes showing what's been done.
- The customer reviews it. They have 7 days to approve the milestone or request changes. If they request changes, the milestone pauses until the work is put right and resubmitted. If they don't respond within 7 days, it's treated as approved.
- The payment is released. Approval releases that milestone's money to the tradesperson, and the job moves to the next milestone until the work is complete.
Citizens Advice describes this same mechanism in its guidance on paying for building work: with an escrow scheme, the money is held in a neutral account belonging to the escrow company, and the trader is paid part or all of it at agreed times [1]. What varies between providers is what triggers a release. On Renofy, releases are tied to milestones the customer verifies against photo evidence – not just to dates on a calendar or a single sign-off at the end.
Who actually holds the money?
An FCA-authorised payment provider – and it's worth being precise, because this is the detail that makes escrow trustworthy or not. On Renofy, escrow funds are held by OPP (Online Payment Platform Ltd), an electronic money institution authorised by the Financial Conduct Authority. OPP holds, releases and refunds the money. Renofy never holds, receives or controls it at any point – Renofy provides the agreement, the milestones and the evidence record, and instructs the release when a milestone is approved, but the money itself never passes through Renofy's hands.
That separation is the point of the design: the platform you deal with day to day and the FCA-authorised provider holding the money are different companies, so the money doesn't depend on the platform. Citizens Advice's advice for any escrow scheme is to check the provider holding the money is registered with the FCA [1] – a check anyone can run on the FCA register before paying in.
Is money in escrow protected?
Yes – through the FCA's safeguarding regime. An FCA-authorised e-money institution must safeguard customer funds: the money is kept in a dedicated account, separate from the provider's own money, so it can't be used to run the provider's business [2].
Two honest caveats. First, escrow funds are not bank deposits, so they are not covered by the Financial Services Compensation Scheme – safeguarding, not the FSCS, is the protection that applies to money held by an e-money institution [2]. Second, escrow protects the money, not the workmanship – whether the work itself is any good is what the milestone review and dispute process are for. If the two sides disagree about a milestone, an independent reviewer with relevant experience can be appointed, with the cost split equally, and the held funds are released or refunded based on that review.
When is escrow worth using?
On staged work where meaningful money would otherwise move ahead of the work – renovations, extensions, bathroom and kitchen refits, anything running to multiple stages over weeks. That's where the gap between "money paid" and "work done" is widest, and where escrow closes it. For a small same-day job, invoicing on completion is simpler and the risk being carried is a day's labour, not a five-figure project.
Escrow is also not the only protection out there – credit cards, chargeback and deposit insurance each cover something, with different caps and conditions. For the full comparison and which to use when, see the safest way to pay for a renovation in the UK.
What does escrow cost?
On Renofy, nothing for the customer – the platform is free for homeowners. The tradesperson pays a 2% platform fee on escrow payouts, deducted from each milestone payment as it's released, with no fee on anything refunded and no separate payment-provider charge. Escrow is offered by the tradesperson: they set it as the payment method on their quote. If you're a homeowner who wants it on your project, ask your tradesperson to send their quote through Renofy with escrow – and if you're a tradesperson, here's what it does for your cash flow.
This is general guidance, not legal or financial advice – the FCA's consumer pages and Citizens Advice cover the protection rules in more depth.
Renofy pairs a shared digital job agreement with escrow held by an FCA-authorised provider: the money is committed before work starts and released on photo-backed milestones, so neither side is taking the other on faith.
References
- Citizens Advice – Before you get work done on your home (escrow schemes hold the deposit in a neutral account belonging to the escrow company, paid to the trader at agreed times; check the provider is FCA-registered). https://www.citizensadvice.org.uk/consumer/getting-home-improvements-done/before-you-get-building-work-done/
- Financial Conduct Authority – Using payment service providers (e-money institutions must safeguard customer funds in a separate account; money with a non-bank payment provider is not protected by the FSCS). https://www.fca.org.uk/consumers/using-payment-service-providers