Escrow for home improvements: how held payments work
Escrow for home improvements means your payment is held by an independent third party instead of going straight to the tradesperson. It's released when the work it covers is approved. The tradesperson knows the money is there before they start, and you know it won't be paid out for work that isn't done.
How it works, step by step
- You and the tradesperson agree the work and the price, often split into stages.
- You pay the amount for the work (or the next stage) into the held payment service.
- The tradesperson can see it's been paid, so they can start with confidence.
- When the work is done, you check it.
- You approve, and the money is released to the tradesperson. If there's a problem, you raise it before approving.
Who it helps
| Homeowner | Tradesperson |
|---|---|
| Money isn't paid out before the work is done | Knows the money is there before starting |
| No large deposit handed over to one person | No chasing invoices after the work is finished |
| A clear point to raise a problem | A clear, agreed point when payment is released |
Citizens Advice mentions escrow as one way a deposit can be kept safe: the money sits in a neutral account rather than with the trader.
What to check before you use a service
- Who actually holds the money. It should be a regulated payment company, not the app or website itself.
- When money is released. Only on your approval, or also automatically after a set time? What stops that clock?
- What happens in a disagreement. Is there a clear process, and does the money stay put while it's sorted out?
- The fees, and who pays them.
- How refunds work if a job is cancelled part-way through.
Escrow isn't the same as deposit insurance
Some traders offer insurance that returns your deposit if they go out of business. That's useful, but it solves a different problem. Insurance helps after a trader has failed; held payments stop money being paid out before the work is approved in the first place.
How PayTrader handles this
PayTrader is built around paying stage by stage. It uses held payments, one stage at a time.
- You and your tradesperson agree the job as stages, each with its own price.
- You pay for a stage before it starts. The money is held by our regulated payment provider — PayTrader never holds it.
- When the stage is done, your tradesperson sends photos through the app.
- You approve, and that stage is released to them. If you don't approve or raise an issue within 14 days of the stage being marked complete, it releases automatically; raising an issue stops the clock.
PayTrader is launching in the UK soon, for a small fee on each stage.
Join the waitlistRelated guides
Common questions
Is my money safe in an escrow service?
That depends on who holds it. Check that the money is held by a regulated payment company rather than by the app or website, and read what happens if there's a dispute.
Can the tradesperson take the money before I approve?
Not with a held payment service. The money is only released when you approve, or under rules you agreed to up front, such as automatic release after a set time if you don't respond.
What happens if we disagree about the work?
A good service has a dispute process, and the money stays held while it's worked through. Check how it works before you start.
Sources
This guide is general information, not legal or financial advice. The figures and court limits above apply in England and Wales unless we say otherwise; rules differ in Scotland and Northern Ireland. If you're unsure about your situation, Citizens Advice can help for free.