I was the only tenant on a year long AST, sharing a 2 bedroom flat with a permitted occupier (they were meant to be a tenant but could not be added to the contract as well so we verbally agreed to this to avoid delays as we needed the flat). We did not have any written agreement but they did sent me half the deposit when signing and half the rent monthly.
They chose to move out after a few months and I agreed to it as long as they found someone to replace them (the agency would only hold me liable, they didn’t care about the occupier). They left without finding a replacement, I eventually found someone but I’ll have some losses at the end of the contract because I lived by myself for a while until I found this new person.
The previous occupier now wants their deposit back. I don’t have it, it’s with the agency. Moreover, I can use it to cover my losses incurred because of their departure without finding a replacement. Can they have any legal claim to their deposit now? Can they make any such claim at the end of the contract when the deposit is returned? Can I safely use it to cover my losses? A landlord would be able to use deposit money to cover unpaid rent, is it the same case now?
Thanks a lot for your advice!