@ djinn,
the deposit was paid to the landlord alright,but the issuer of the receipt was an agent...legally then the landlord 'knows nothing' about this deposit...so ideally,if your friend had to sue for the refund,he would sue the agent and not the landlord...the landlord has simply transfered his financial dealings or responsibilities to the agent to act on his behalf...clever landlord!!!
next,the letter of offer did gave the commencement of tenancy which was 4 weeks time but the letter did not include any conditions required to be met by the landlord prio to the occupation...this is where the catch is...your friend does not have any proof that there was an existing condition which the landlord did not live upto that prevented him from moving in into the rental...
unless your friend goes out and hire a couple of seasoned goons with red eyes and bulging byceps and parades them right infront of the landlords home,your friend can forget about the money and look for a house elsewhere....
otherwise he can still landlord,sign a lease and further agree with the landlord in writting that he (your friend) will foot the bill of repairs and additionals which will be recovered from the rent....this would have to be done before entering moving into the house...
NEVER TALK OF A RHINO IF THERE IS NO TREE NEAREBY - ZULU PROVERB
...besides, the presence of a safe alone does not signify that there is money inside...