Notice?

Tenancy Deposits

Hello, We've had a tenant in our house for the last six months, the Tenancy Agreement ends in August so we contacted them in June and ask of their intentions, they assured us they wanted to stay long term but as we've had various problems with them (remember the pigeons!) we offerered them a Statutory Roll Over Agreement telling them all stays the same regarding Notice. We wrote to them stating this. However they's just rang and said they now want to leave in August giving us just over a weeks Notice. Are we able to keep their deposit in leau of the Notice, also the house is in an awful state (we're hoping they'll clean it before leave) but they've painted walls, they ask if they could paint one wall, I agreed to one wall as long as the colour was fairly neutral, as they were supposedly staying I thought this was reasonable. They painted all four walls in the sitting room in really dark colours.
We feel we're probably better off letting them go as soon as possible but we've have to get the house sorted and re-let. Which is obviously going to cost us.
Hope you can tell us how we stand.
Best regards R&T