Labour has voted down a call to freeze rents in Wales, warning that it could lead to buy-to-let landlords fleeing the market and exasperating the housing shortage in the private rented sector.

In a Senedd debate, Plaid Cymru lobbied Labour MSs to follow Scotland’s lead by freezing rents and banning evictions through the winter.

Ministers have said that while they are prepared to look at what happens in Scotland, they are concerned about the “unintended consequences” of the policy. A rent freeze could have an adverse impact on the market by deterring landlords from investing in the sector or increasing rents before they are frozen, the Welsh government said.

Housing minister Julie James was keen to point out that the Welsh government had increased funding to local councils to help tenants with their bills. She warned that freezing all rents could have “very serious unintended consequences”. Instead, she said the government wanted to “target the support at the people who are most vulnerable and make sure they stay in their homes”.

“We don’t want to drive landlords away from the sector,” she added.