Renovation Payment Protection in Singapore: How Escrow Works and What It Covers

When you pay your interior designer, your money goes directly into their bank account. That is how almost every renovation in Singapore is paid for, one stage at a time, until the renovation is complete.

It is worth knowing what that means for your money along the way.

Once the money is in their account, they can use it however they want. Most of it pays for your materials and your labour. Some of it could also go towards their rent, their staff, or other projects they are running at the same time.

If the renovation goes well, none of this matters. In the event it does not, you have already paid for work you have not received, and getting that money back depends entirely on your interior designer agreeing to return it.

For a long time, this was the only way to pay for a renovation. There is now another way, one where your money stays out of your designer’s account until you have seen the work it is paying for. It is new to renovation in Singapore, but the mechanism itself is not new at all, and you have almost certainly used it before without knowing its name.

This guide covers what escrow is, how it works in a renovation, what it protects, and where it stops.

What escrow actually means

Escrow is an arrangement where a neutral third party holds the money until the agreed conditions are met.

You pay. The third party holds the money. The seller gets paid once the agreed work or delivery is complete. Before that, nobody can touch it.

That is the whole idea. Your money is set aside and clearly committed, but nobody can spend it yet.

The useful part is not that the money is held. It is that the money is only paid out for a reason, and you are the one who decides that reason has been met.

Everyday examples of escrow

The word escrow might sound new or technical. The arrangement is not. Most people in Singapore have already used it, usually without noticing.

Shopee and Lazada. When you buy something, your money does not go straight into the seller’s account. The platform holds it. The seller gets paid after you confirm the item arrived, or after the confirmation window runs out. If the item never turns up, your money is still with the platform.

Buying a home. Your deposit usually goes to a solicitor, not to the seller. It is only paid out at completion, when the property actually changes hands.

In both cases, somebody neutral holds the money, and something has to happen before it reaches the other side.

A renovation is where this matters most, and it is also where you see it least. You are paying tens of thousands of dollars, in stages, over several months, for work you cannot inspect until it exists.

Why renovation escrow works differently

Most escrow arrangements are built around one event. A property sale completes. A business changes hands. One deposit, one release, one moment.

A renovation is not one event. It is five or six. Your flat is hacked. Walls, floors and tiling go in. Carpentry is installed. Everything is painted. Defects are cleared. Each is a separate piece of work, and each is usually paid for separately.

So renovation escrow pays out in stages. Each payment is matched to a stage of work, and each payout depends on that stage being finished.

That difference matters. With a single release, you are protected right up until completion, and then the protection ends. With staged payouts, you are protected every time money leaves your side, and in a renovation that is where nearly all the risk sits.

How it works, stage by stage

You and your ID agree a payment schedule, the same as you would anyway. It sets out what gets paid at each stage, and what has to be finished before each payment is due. For what a fair schedule should contain, see our guide to renovation payment schedules in Singapore.

The only thing that changes is where your money goes.

Instead of paying each stage into your ID’s bank account, you pay it into an escrow account. Your ID can see the money is there and can start work knowing it is set aside for them. But it is not in their account yet.

When the stage is finished, your ID tells you it is ready. You check the work against what you agreed. If you are happy, you approve it and the money is paid out to your ID. If you are not, the money stays where it is until the problem is sorted out.

That last row is the one that matters.

In a normal renovation, if you are unhappy with a stage you have already paid for, your only options are to persuade your ID to come back or to chase them afterwards. With escrow, the money is still sitting in the escrow account. You decide when it is paid out, and until you do, it stays where it is.

This is how renovation payments work on Handshake, if you want to see it applied to a real payment schedule.

Who holds the money, and under what rules

This is the part worth checking on any platform you consider.

Your money should not sit in the platform’s own business account. If it does, it is mixed in with the company’s own money, and your protection depends on that company staying afloat.

On Handshake, all payments on the platform are MAS regulated. Funds are held in a custodian account with DBS.

In practice that means your money sits at a bank, in an account kept separate from Handshake’s own, and it is only paid out when the terms of the arrangement say so. Your interior designer cannot take it out. Neither can the platform.

If you are looking at any payment protection service, ask two questions. Where is my money actually held, and who is able to take it out? Anything worth using can answer both in plain language.

What escrow cannot do

Escrow does one job well. Most disappointment comes from expecting it to do a different one.

It protects your money, not the workmanship. Escrow does not inspect your tiling or check your carpentry. If a stage is done badly, escrow lets you hold the payment back until it is fixed. It will not turn a poor job into a good one. Choosing a capable interior designer is still the most important decision you make.

It only covers the payments that go through it. If you have already paid a deposit straight into your ID’s bank account, that money is theirs and escrow cannot reach it. Escrow protects what you have not paid yet, not what has already gone.

It does not decide who is right. If you say a stage is unfinished and your ID says it is done, escrow does not settle that for you. What it does is hold the money while the two of you work it out. Neither side can take it out alone, so a disagreement does not become a race for the funds. Most renovation disagreements are ordinary, a finish that is not what was agreed or a section that is nearly done, and they get settled with a conversation and a site visit.

It is not insurance. Escrow protects the money you have committed to the project. It does not cover physical damage to your home during the works, which is a separate thing entirely. For how that works, see our guide to renovation insurance in Singapore.

How Handshake does this

Handshake is a renovation payment platform for Singapore homeowners. All payments on the platform are MAS regulated, and funds are held in a custodian account with DBS.

It works the way described above. You pay each stage into escrow instead of straight into your interior designer’s bank account. Your designer can see the money is set aside and gets on with the work. When the stage is done and you approve it, the money is paid out to them.

Every milestone payment is held in full until you approve it.

You do not pay for the renovation upfront. You fund each stage when it falls due, exactly as you would now. What changes is that each of those payments goes into the escrow account rather than into your designer’s account. On an $80,000 renovation, that means all $80,000 is protected across the project, and each part of it is only paid out once you have approved the stage it belongs to.

Compare that with how the same renovation is normally paid. Each stage payment goes straight into your designer’s account when it falls due. By the time you are halfway through, tens of thousands of dollars have already left your hands, and getting any of it back depends on your designer agreeing to return it.

At every point in the renovation, the money for work you have not yet approved is still sitting in the escrow account rather than in your designer’s.

The exact structure is agreed for each project, and some arrangements pay out part of a stage payment earlier so your designer can fund the work. Whichever applies to yours is set out before you start, not decided along the way.

What it costs

Using escrow costs you nothing. Your interior designer pays a fee based on the transaction.

Some projects split the fee, or the homeowner covers it. That is agreed at the start rather than sprung on anyone later. But the default is that the designer pays.

Which raises a fair question. If you are not paying, why would an interior designer agree to it?

Because it solves a problem they have too.

The payments interior designers chase hardest are the handover payment and variation orders. That is the money owed once the work is finished, or once extra work has been agreed partway through. In a normal renovation those are the payments most likely to be delayed or argued over. With escrow, that money is already sitting in the account before the work starts.

A designer using escrow gets paid when you approve, rather than by chasing you. They also get a client who is more comfortable committing to a large project, because that client is not being asked to hand over large sums on trust alone.

So the protection is not free in the sense that nobody pays for it. Your interior designer pays for it, because they get something out of it too.

FAQ: renovation escrow in Singapore

Is renovation escrow common in Singapore?

Not yet. Most renovations are still paid straight into the interior designer’s bank account at each stage. Escrow is well established in property deals and online marketplaces, and it is newer in renovation, which is why many homeowners and designers have not come across it.

Can I use escrow if I have already paid my deposit?

Yes, for the payments you have not made yet. Escrow only covers money that goes through it, so a deposit already in your ID’s account stays where it is. If you are partway through a renovation, the remaining stages can still be set up this way. For what a normal deposit looks like and what to watch for, see our guide to renovation deposits in Singapore.

Who decides when a stage is complete?

You do. Your interior designer tells you when they think the stage is finished, and you check it against what you agreed before approving it. That is the point of the arrangement. The person paying decides when the work has been delivered.

What if my interior designer does not want to use it?

That does happen, and it is worth understanding why before deciding what to do. Some objections are practical, such as cash flow on a project already underway. Others are worth paying closer attention to, particularly a firm that will not explain its reasons.

Does escrow protect me against bad workmanship?

No. Escrow protects your money, not the quality of the work. What it gives you is the ability to hold a payment back until a problem is fixed, which is a much stronger position than asking for money back after it has been paid.