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Rent deposit scheme, eviction & hb arears

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Please can someone give us some direction.
We currently own the property next door. The tenant in there, has been there 2 years. At first we let the property out on an agreement he would pay £50 per mth towards his deposit. This never materialised. The guy was an ex workmate going back 8/9 years ago and still kept in touch via social media etc. Never knew he wasn't good for the money until this all started.

This year, we tried to evict him, only to find out that we couldn't because we didnt have any deposit in a scheme for him. even though he never paid a deposit.

All transactions were logged bank accounts and reciepts, and not one payment was towards his deposit. Now Shelter managed to squash this case, because we were going for rent areas too. as this point he owed some what £2k. My partner who manages it, was happy with the HB amount, until it got to the point, that the mortgage was going up. So we took him to court, He had a counter claim, falsified with health issues due to dampness, compensation for belongins.
Now each time theres a problem with the property- we get told by housing standards, not the tenant. Hes too quick to report us.

Now we live in exact mirror property, and this place was gutted 4 years ago, 2 years prior to him moving in, so we got a damp specialist come in, and report it was due to his condensation, drier in bedroom etc.

Well after this case was dropped, we put £300 in a rent deposit scheme, because he stated to his solicior this is how much he gave us. We knew this was incorrect. The money came from our back pockets just to drop this case.
So recently served him again another section, just to get him out. we so desperatly want this house back and him away.

So today, the tenant asks us for our bank details. so my partner gave him. This is so he can pay his top up. God knows the guys been there 2 years, never topped anything up.
Needless to say, his HB has also stopped, and wont be paid for 8 weeks now. So were left out of pocket again and rent arears of £425 amounting already.
Now we have another 2 months of waiting, until sections ran out, take him court again, theres another 2-4 weeks, court gives him 2 weeks to evict. The piece of paper to say court says get out is all he wants, as hes after a council property. The guy doesnt work, and theres a new partner moved in which shes pregnant and so thats 3 children, 2 adults in 2 bedroom property.

But where do we go with the deposit? Do we have to give him, what rightfully isnt his in the first place?

Are we allowed to diminish or take out the deposit before hes evicted?

I just want this nightmare to end.

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