I have a number of live-in-landlord friends who have told me they're rarely able to make deductions from lodger deposits due to threats of revenge, and that in reality the law doesn't protect landlords from damage by lodgers.
One of my friends had a lodger who caused over £1000 damage to her kitchen worktops by not using the chopping board. She evicted him & kept his deposit (which was not enough to pay for the damage). As well as refusing to pay for the damage he had caused, he 'shopped her' by reporting her to as many authorities as he could find, making up random stories about her. The end result was that she was forced by trading standards to return his deposit, and suspended from a popular room advertising site pending an "investigation", but was not allowed to advertise to find a replacement lodger for months, which resulted in far more than £1000 lost. She was found innocent after these investigations, but not without causing months of headaches, stress, forms to fill out, documents to prove herself, and months in lost rent.
I have heard of plenty more stories like the above. Is there any guaranteed way live-in-landlords have to protect themselves from revenge actions like this? If not, I suspect the live in landlord will gradually become a thing of the past...