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I would put this IP in the hands of a PM immediately, and I'd ensure the required legal notice is given prior to the expiry of the lease to move her on. Don't try and handle this yourself, if you get anything wrong kicking out this kind of tennant the tribunal will be all over you like white on...

It's about; good business (keeps tennant happy for small price), risk management (they're already threatening legal action, what would happen if they got robbed) & integrity (don't go back on your word, you said you'd replace it so do it).

^^^ Couldn't agree more. Do a double backflip and just replace the lock, now.