The Council of Mortgage Lenders (CML) has revealed its opposition to the introduction of rent controls.
In a statement issued to FT Advisor, the organisation discussed the issue in response to plans that have been put forward by the Scottish National Party (SNP) in a consultation on the introduction of a new tenancy system.
Kennedy Foster, CML policy consultant for Scotland, stated: "As the consultation recognises rent levels form a complex picture and while some areas such as Aberdeen and Edinburgh may have seen above average increases in rent levels, these are very much as a result of demand exceeding supply.
"We believe that the introduction of rent control is likely to dampen appetite amongst institutional investors to invest in the sector," Ms Foster added.
She said this would have a negative impact on the availability of buy-to-let mortgages, which in turn would drive up rents at the start of a tenancy to compensate for lower increases during the rental term.
Ms Foster also revealed the CML is opposed to some other proposals put forward by the SNP, such as removing the no-fault grounds for possession of a property and excluding the ability to roll-over a tenancy on a monthly basis.
The subject of rent controls recently hit the headlines when a Generation Rent survey revealed less than one in ten Britons are opposed to the introduction of this measure. Some 59 per cent of people said they would support the policy, while 34 per cent have no opinion.
Most organisations associated with the private rented sector have expressed their opposition to rent controls, however. The Residential Landlords Association has warned the policy would actually leave tenants worse off, claiming it would discourage investment in the rental market when it is most needed.
A report from the organisation said the introduction of controls during the First World War served to damage standards in the sector.