Tenant refusing to pay rent after Letting agent took their deposit
I currently have a Tenant who I found via a letting agent. The Letting agent has since close their business but haven't returned any money to the Tenant. They have also held onto a months rent but they were too difficult to chase down so I gave up on that. I only found out that the Tenant had paid ~£2000 which included £875 deposit and shortfall (their earnings meant that they couldn't afford the rent I had demanded). I had no awareness of the shortfall which they had paid and in our Tenancy contract, there was just the £875 deposit written. We since found out that the deposit wasn't protected in the government scheme so I said that I would reimburse their deposit since it was my fault for not being aware that the deposit wasn't protected, this is my first time letting out my property.
They are now arguing that I need to be responsible for the entire amount which they had paid to the Letting agent. I have so far refused this and as a result, they are not paying their rent. They are currently 2 months in arrears. My initial thought was to hire a lawyer to look into this for me but before that, I wanted to know if anyone here has any useful advice on what my next steps should be.
Appreciate any advice offered.
Thank you in advance.
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