Just out of curiousity, we selling our house but we arn't buying another house (trying to get a council house), what would happen to the equity that we make on selling this house and also I put a substantial deposit on this house from selling my flat, what happens to that, anybody know anything about these things?

you get to put it in your wallet, if it's big enough.

Capital gains are not realised on property sale (for people not companies). There is no tax liable on the profit you make.
Nothing special happens because of or due to the deposit, which doesn't exist in its own right anymore.

Or put anything left over after you've settled your mortgage and paid your legal fees in the bank/savings account/building society etc, or (best idea) pay off any credit cards or loans that you have.

:)