The tenant can bring an action against you for compensation for failing to register the deposit on time. The court can award between 1 and 3 times the value of the deposit as compensation.
Do note that the tenant can do this even if you agree to ending the tenancy early.
You are not obligated to pay the deposit back during the term but are potentially liable to compensate the tenant as stated above.
However if you wish to serve a s.21 notice to get possession you will need to refund the deposit before serving notice.
You do not have to agree to a surrender of the tenancy. The tenant is contractually bound to the term and the rental obligations.
You can deduct sums from the deposit to cover defaults in rent. Once you have used up the deposit fund you will need to sue the tenant in court for any arrears.
Register the deposit today. The tenant can still sue you for compensation but you are then protected should you need to make deductions or serve a s.21 notice.
Any further questions or queries?
Tenant is liable to pay. Do not refund deposit until tenant has vacated. If you register the deposit it only needs to be refunded within 10 days of agreement on any deductions.
If the arrears etc eat up the deposit you claim against the tenant in the small claims court.