Bond ‘guarantee’ schemes
Most schemes work by providing a written guarantee to your landlord to cover any losses due to unpaid rent or damage. When your contract ends, your landlord can ask the scheme-provider to pay for damage you caused or rent you didn’t pay.
Your landlord doesn’t have to register any guarantee with a deposit protection scheme.
No money actually changes hands in a guarantee scheme. Some schemes offer a guarantee for the duration of your contract, but most schemes only provide a guarantee for a specific period of time (e.g. 2 years). If the guarantee is only for a certain time, you may have to make small payments towards a deposit. Once you have built up enough payments you will then be able to pay this sum to the landlord as a security deposit. The bond scheme will end the guarantee once your landlord receives the security deposit. The deposit must then be protected in a deposit protection scheme.
Bond loan schemes
Some schemes may offer loans for you to pay over to the landlord as a security deposit. Usually, the scheme lends you the money in advance and you pay it back over a period of time from your wages or benefits. If there are no problems, you should get your deposit back at the end of your occupation contract.
If you have a standard occupation contract, the deposit you pay from the loan must be protected by a deposit protection scheme.