Many thanks to all for your replies - I have spoken with Landlord/Seller, who has offered to return deposit " if I am really out of pocket"... which of course I am - so it looks like the Letting Agents were being overly zealous - perhaps because they get a part of rent, and would be out of pocket if rent is unpaid ? So this looks like an amicable settlement. Thanks again.

As a corollary, I am paying 150K without haggling, and the Sellers are saving Agencies fees through direct sale, so I really think it is reasonable to forego the rent for a month or so, don't you ?

As lease dated from 01/3, the new Tenancy Deposit Scheme does not apply, unfortunately. I believe, however, that deposit was held by Agents in previous scheme. Agreement with Landlord was, unfortunately, only verbal. I received a rent reminder for September from the Agents, and informed them that I had an agreement with the Landlord, and in my innocence left things at that. The Agent has said that they will claim money back from the Landlord to return my deposit to me, along with the master-set of keys which they are holding, but surely they should not have used the deposit to cover rent in the first place ?

I have a singular situation here: initially a tenant with a 6-month lease, ending on 31/8 with option to renew, I was informed via the letting agent that the Landlord required vacation as he wished to sell the property. As sitting tenant, I requested first refusal, and agreed directly with the Landlord on a purchase price, with no intermediate estate agents. We agreed verbally over the phone that as I was purchasing the property, there would be no need to pay rent for September, as if I had moved out, the property would have been empty and no rent paid anyway. Sale has taken a little longer than expected, principally because several insurance policies required from the Seller were not set up. They have nevertheless achieved end-of-tenancy to sale in under 8 weeks, which has to be a record ! Completion is finally fixed for 24/10 , so I contacted the original Letting agents to request return of my initial deposit, as no longer required since I become the owner. Letting agent replied that my deposit had been forwarded to the Landlord in lieu of September rent...! Surely this is illegal - not to mention contrary to my agreement with the Seller? What is my best course of action here? Thanks