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, but 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.

Plaid Cymru’s Mabon ap Gwynfor urged Labour Senedd members to “be brave, be bold”.

The Welsh Plaid Cymru politician added: “Here today we have a proposal to at least do something to help many of those threatened with homelessness this winter, as opposed to doing nothing.”

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.

James called on the UK government to unfreeze housing allowance, which has not kept up with rent rises.

But while the Welsh government has rejected a rent freeze, it is understood to be considering rent controls.

Carolyn Thomas, Labour north Wales MS, said: “The time for a private rent freeze isn’t now. The situation is too volatile, complex and risky under the UK government’s political, economic crisis.”

Conservative MS Janet Finch-Saunders described rent controls as a “nightmare”, adding that Plaid’s debate “tries to do down the private rented sector”.