because economist across political allegience agree its bad, as you break two rules of markets, price information and incentive. investment in new rental property and more significantly maintenance and upgrading of property disappears if there is no likelyhood of a return, and you dont know where what investment you have left should be made. as the Shelter quote notes, if you are faced with a cap on return, you may just sell up, reducing the rental stock.
housing will be addressed by two policies. building more, and remove regulatory hurdles to building. not in construction standards, but in daft rules like 10% being "affordable". and that includes allowing councils to build, if they have the funding, the land and the demand, they should be allowed to particpate in the market like any private developer.
For perhaps once I will agree with JC. You buy land with development permission build within nine months, without permission 18mths. If not the government will compulsory purchase and build 100% council stock.