The Home Builders Federation has warned that Ed Miliband's proposals to cap private rent rises "must not deter potential investment".
Stewart Baseley, executive chairman of the group, said:
Building more new homes is the only answer to solving the problems caused by the country’s housing crisis. New homes are required in all tenures; for people to buy or rent as well as more new affordable homes.
Any new intervention in the market has to be measured against the potential impact on investment and new housing supply.
We would be very concerned about any measures that could damage the private rental sector or buy to let market or have implications for housing supply generally. Any proposals must not deter potential investment.
Labour leader Ed Miliband has dismissed Tory claims that his 'Generation Rent' policy is a type of rent policy favoured by Venezuelan leader Hugo Chavez, after a similar proposal was made in 2013 by Communities Secretary Eric Pickles.
Miliband defended capping private sector rent rises, ban letting agents charging tenants fees and introducing three-year tenancies, by saying they are used widely in other countries.
"There are many, many other countries all around the world where the private rental market thrives on this basis" Miliband said.
"Mr Pickles is advocating Labour's policy so I am looking forward to (former Conservative Minister of State for Housing) Grant Shapps saying to Eric Pickles that he is Hugo Chavez."
"This is the right and sensible way to give protection to tenants but also, I believe, will be good for landlords."
Kick-starting his party's campaign for the European and local elections, Ed Miliband has said he will tackle the "cost of living crisis" by pledging that his government will build "200,000 homes a year," if elected.
To do this, Ed Milliband said he will "enable local authorities to expand when they want to" and also "stop firms hoarding land rather than building on it."
On the visit to Redbridge, north-east London, the Labour leader also pledged a cap on private sector rent rises, banning letting agents charging tenants fees and introduce three-year tenancies.
Chris Walker, head of housing and planning at the think tank Policy Exchange has dismissed capping rents, saying landlords could potentially leave the housing market altogether.
Capping rents could potentially lead to landlords simply withdrawing from the market, if they don't get the price they need to make their investment economically sound.
– Chris Walker - Policy Exchange
Ahead of party's campaign for the European and local elections, Ed Miliband has pledged rent controls such as banning letting agents charging tenants fees and introduce three-year tenancies, if he came to power.
Sam Bowman, research director at the Adam Smith Institute said that "rent control is a stunningly bad idea that could devastate Britain’s cities and clobber renters. To paraphrase the socialist economist Assar Lindbeck: the only thing worse for cities than rent control is bombing them."
This comes as Ed Miliband pledges private sector rent rises, ban letting agents charging tenants fees and introduce three-year tenancies, ahead of his party's campaign for the European and local elections.
Labour has dismissed claims a rent cap would severely interfere in the private rented sector and drive down the quality of accommodation on offer to tenants.
The Shadow Secretary for Communities, Hilary Benn, told Good Morning Britain capping the amount paid for rent would give tenants "peace of mind" and provide "security for the growing number of families in the private sector".