Deposit & unpaid bill

[rladwa]

Hi all,

I rent my house out to post grad university students with an AST, fixed for one year. There are three tenants, of which two have left and one remains for this year. I advised the two that left that in order to get their deposits back, I need to see proof that the bills (gas, electricity, water and BT) have been paid. Under the terms of the AST, it advises that all utilities must be settled upon departure. The additional complication is that the bills are in various names (some even before the tenants that have moved out).

I have advised the tenants that I will release their deposit back to them as soon as I have seen proof that all bills have been paid. The tenant has advised me that I am holding onto his deposit illegally as this is his money and that he is not responsible for closing down the other accounts not in his name and that a deposit cannot be held against unpaid utility bills. My question is, is this correct? Am I legally obliged to return his deposit even though the bills have not been paid? He has advised he will pay the bill in his name and that I need to contact the remaining tenant in order to verify the other bills have been paid, as he and the other tenant who has left have apparently contributed to these bills. I don't see why I should have to do this, as they are responsible for the bills. He has also advised that he will take legal action if I do not return the deposit once the gas bill is paid. The deposit is secured with depositprotection.com

Any advice would be much appreciated. Thank you.