Campaigners have welcomed the publication of proposed legislation that would give councils the ability to introduce rent controls in areas where there are "excessive" increases.
The Scottish Government's Private Housing (Tenancies) Bill was hailed by Shelter Scotland as "the biggest move forward in private tenancy law" in 25 years.
The Scottish Association of Landlords has warned rent controls could harm investment in the sector and push landlords out of the market.
The Bill aims to protect 700,000 private-sector tenants from unfair eviction and unpredictable rent increases.
If passed, landlords will no longer be able to ask tenants to leave simply because a tenancy has reached its end date, known as the "no-fault" ground.
Rent increases will be limited to one per year with three months' notice and councils will be able to apply to ministers to cap the levels of rent increases for tenants in rent pressure zones.
The Bill also aims to introduce a more streamlined system with no confusing pre-tenancy notices, modernised grounds for repossession and easier-to-understand tenancy agreements.
Housing minister Margaret Burgess said: "The private rented sector is changing.
"It is now home to a growing number of people in Scotland and we recognise there are some areas where rents are increasing significantly.
"It is right and responsible to give local authorities the ability to introduce rent controls in order to ease areas under pressure."
Graeme Brown, director of Shelter Scotland, said: "This bill represents the biggest move forward in private tenancy law in the last quarter of a century.
"Shelter Scotland hopes this Bill will rebalance the relationship between tenant and landlord by improving security of tenure for private renters and laying down a clear, modernised new tenancy, benefiting landlords and tenants alike."
The Bill was also welcomed by Citizens Advice Scotland, with spokesman Fraser Sutherland saying it would make private rented tenants' rights "stronger than ever before" and give landlords better rights against problem tenants.
Green MSP Patrick Harvie pointed out almost a fifth of homeless applications come from the private rented sector while average rents across Scotland have risen by 17.5% over the last five years.
John Blackwood, chief executive of the Scottish Association of Landlords, said landlords and letting agents supported the modernisation of the sector.
But he added: "Whilst we understand the political pressure to tackle rent rises in hotspots such as Aberdeen and Edinburgh, we are concerned these measures could harm investor confidence and drive landlords out of the market, leaving a vacuum that could be filled with less than scrupulous individuals."
Private Rented Sector (PRS) 4 Scotland said rents in some former hotspots such as Aberdeen were actually decreasing while Chartered Institute of Housing Scotland director Annie Mauger said the legislation needed to strike "the right balance" between the needs of tenants and landlords to ensure investment is not "discouraged".
Scottish Labour communities spokesman Ken Macintosh welcomed moves to regulate the private rented sector but said the issue was part of a wider "crisis" in Scottish housing.
He said: "Just this week expert groups like Shelter Scotland, the Scottish Federation of Housing Associations and the Chartered Institute of Housing have a simple, clear message for the SNP government in Edinburgh - they simply aren't building enough homes."
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