Hello, I am a solicitor with 20 years experience. I will try to help you with this.
It seems to me that your dispute is with the landlord not the tenant. You should also not be holding the tenant's deposit that should be in a deposit guarantee scheme. It is the tenant's money and you must not take from that to help you with your dispute with the landlord. Assuming your description of your contract with the landlords is correct then you should write to them demanding your outstanding fees. If they fail to pay you can commence a money claim in the small claims court. http://www.adviceguide.org.uk/wales/law_w/law_legal_system_e/law_taking_legal_action_e/small_claims.htm
That fine, we hold the deposit under the tds insurance scheme so that side of things is in order, howver as the tenancy is continuing we can not check out the tenant as they are strill there hence should we not hold on to the deposit until they finally vacate ?
If it is held by the TDS is not yours but held by TDS on behalf of the tenants. You do seem to have a valid claim against the landlord under your original agreement and should take the steps suggested above to claim the money you are owed.