Problems taking over tenants - long-ish

Tax Planning and Financial

I have just bought a flat with student tenants in situ. I have a copy of their AST (now rolling) and the letting agent assured me there would be no problem with me taking over the management direct (they also sold the flat).

Now that we have completed the agent is saying they require the tenant's permission to hand over the security deposit. Firstly is this correct?

I sent a section 18 notice a week ago by recorded delivery but the Post Office are claiming not to have delivered it yet (industrial action excuse). The rent was due on the 1st so I visited yesterday - now the agents tell me that they pay in cash.....

None of the three name tenants were in residence. Allegedly they have "returned to China" for a month and the person that was there claimed to be "just visiting" but responsible for the rent.....there seemed to be plenty of possessions around and a chequebook on the table for somebody else (not the tenants or the person there). The person in residence gave us £200 against the rent and promised the balance today when we go back.

I suspect that the legal tenants have left. How best to proceed? I don't collect rents in cash from any of my tenants and don't wish to but the flat would clean up well and rent easily.