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@Greasy_Slag
I'd say it was the inflexibility of the systems and un-urgent/non-proffesional attitude of the landlord and agency that has led to frustration. Then the landlord get greedy. it's £500 notes between how many?
I'd go to small claims just to make their lifes that little bit more difficult, write off the £500 but make the landlord work for it. chances are he is so un-organised his lack of preparation will be seen as guilt by the court and you could well win!
I went to small claims court once for the landlord with holding £800 deposit on the grounds we left rubbish outside the house! He then claimed he was holding it because we paid our rent late a few times (one of my mates was no Warren Buffet - to put it politely) so to prove this in court he sent a photo of the house from the 1970s and a copy of his bank statement with one late cheque underlined.
The photo was so old the colour had faded (house was a different colour and shape back but looked like a work site) and his bank statement showed payments in the £1000s to holiday companies
Judge awarded full payment, costs and any expenses to be paid up in full, he even asked for us to estimate what we would spend on lunch and add that to the expenses. Happy days!