PRIVATE landlords have been warned to comply with new laws on deposits or face big payouts to tenants.
New rules to ensure tenants get their deposits returned come into force this week with a warning for landlords to behave responsibly.
The Scottish Association Of Landlords has told members to comply and Housing Minister Keith Brown said the rules would help improve the sector's reputation.
An estimated £3.6m of deposits is wrongly withheld from about 8000 to 11,000 tenants by landlords every year and the only way for tenants to have the cash returned has been through taking legal action.
Now the deposits must be held in a separate account with an approved deposit scheme not controlled by the landlord.
But the association warned it could divide the sector further, with only the already responsible landlords complying with the rules, leaving bad landlords profiteering at tenants' expense.
Director John Blackwood said: "The introduction of mandatory landlord registration of all private landlords in Scotland, which came into force in 2006, has done little to weed out poor landlords providing low quality accommodation and management standards.
"The Scottish Association Of Landlords believes that, yet again, only good landlords will comply with these new regulations and hand over their tenants' deposits to one of the approved schemes.
'Whilst we support any measure to remove bad landlords from the sector, we urge all landlords to understand how important it is to comply.
"Ultimately if they don't, then tenants can apply to the sheriff to have their landlord fined up to three times the deposit, payable to the tenant.
"The opportunity of receiving such a lump sum is a strong incentive to tenants to take action against non-compliant landlords and one that all landlords should be aware of."
For now, the scheme is voluntary, but from November landlords will have to transfer the tenant's deposit to a licensed operator.
At the end of the tenancy, if the tenant disputes any deductions proposed by the landlord, the landlord must provide documentary evidence showing why a deduction is justified.
Three schemes – SafeDeposits Scotland, Letting Protection Service Scotland and Mydeposits Scotland – will take deposits from landlords or their agents for safekeeping.
Mr Brown said: "This legislation is aimed at tackling those who continue to tarnish the image of the private rented sector."