You might want to speak to Shelter about this or get some legal advice from a free law centre as it could depend on your specific arrangment with the letting agent. However, if that money is a damage deposit it is intended to cover damage to the property so there is no reason why you should not get that back as you haven’t even moved in.
I would imagine that all you should lose in this situation is the £100 holding fee – which is designed to cover any losses in circumstances like these. In most situations I have been in personally the deposit isn’t paid until the day you move in (or the day before) so they shouldn’t even have that money anyway, let alone be able to hold on to it. Perhaps ask them on what basis they’re keeping money that you paid over to cover damage to the property?
It might be that someone at the agent has misunderstood that £100 is a holding deposit and the rest a damage deposit and that only one of these can usually be retained by them in this situation. Check with them before contacting anyone else as it could simply be a misunderstanding.
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