A tenant’s deposit (bond) is held to cover damage, breakages, and any other liabilities under the terms of the tenancy agreement, it is treated as the tenant’s money and landlords have no automatic right to keep any of it at the end of the tenancy.
Landlords have to register their tenant’s deposit with one of the approved deposit protection schemes within 30 days under current legislation. The penalties for not doing so include losing the right to evict tenants under a Section 21 Notice and a fine of three times the deposit taken, plus the original deposit, if a tenant takes you to the small claims court for non protection.
The deposit cannot be used by the tenant to cover rent arrears. The tenants must agree to any deductions at the end of their tenancy, if they don’t and you cannot come to an agreement, all schemes have a free ADR service in order to get resolution between you for the disputed amount. The undisputed amount should be returned asap.