Landlord requests 6 months deposit which is illegal

Hey guys! My name is Alex and I've been living in Milan for a year now.

I'm currently living in an apartment I rented on uniplaces but a colleague and I started looking for a new apartment for the oncoming academic year in June. We found an apartment that we liked that didn't involve an agency. I got in touch with the tenants, they were managing the tenant-replacement and the communication with the landlord (who doesn't speak Italian). The conditions were simple: 650 euros rent per person, 1000 euros deposit per person + the furniture that we had to buy from the tenants (since they bought everything).

Quite quickly and foolishly we payed the furniture and 1K deposit before signing anything. Then the administrators started requesting documents (ID, references, parents' profession) from us found out we were students and that we didn't have a "stable income" (even if my friend's father signed as our guarant). They increased the deposit to 3125 euros per person (2125 more to pay). We tried to negotiate but they refused to change it.

Now, since I'm a stuborn Balkan native and I refuse to get ripped off, I researched and found out that according to art. 11, act n. 392/1978 of the Italian Law, the maximum deposit a landlord can request is a 3 months deposit, which in our case in 1950 euros. Moreover, the landlord must put this deposit in a bank under the tenant's name, and it will be returned with interest at the expiration of the lease (if no damage is caused). Confronted the landlord about this and he said we were in no position to be requesting conditions and to be having pretentions, and that we are free to back off if we don't like it. He also specified that the deposit will be returned with no interest.

I'm afraid we can't back off because we already payed 1K deposit that is not registered and no written evidence/contract of it exists and we bought the furniture from the last tenants and I don't want to screw them over by requesting the money back (considering that it's been almost three months since we payed for that). I'm afraid that if we do agree to pay the 3K deposit, we wont have any tenancy deposit protection since I highly doubt that the landlord will register the quite obviously illegal contract at the Agenzia delle Entrate (IRS).

I need some advice, what should I do? I mean taking this to court seems ridiculous and impossible to me. We're supposed to decide by September 30th and move in in October...