Many thanks for the reply. It is quite an interesting case if I may bore you.
The T commenced with the Assured Shorthold Tenancy agreement on the Ist March 2016 and subsequently gave me notice to quit on, or about, 1st July 2016 with a vacating date of 30th July 2016 informing me that he had purchased a property. Around the middle of July the T spoke to me and told me that his new property would not be ready for habitation on the date previously agreed for vacating the property. At that time I agreed that he could stay at the property on an ongoing daily basis and that the rental would be deducted from his returning deposit on this agreement at his request. I did this to help out the T.
It has to be pointed out that the T was aware that the deposit was not placed in a deposit protection scheme. This is proven by his request that the extra time his remaining at the property be covered by the deposit. This could not be done if the deposit was in a TDP, as the very reason for the TDP is to protect the deposit which cannot be accessed by the landlord. The T was party in the knowledge that the deposit was not put in a TDP.