People in Sydney and other parts of NSW will only be able to rent their properties on Airbnb for about half of the year, and strata bodies will be able to ban the service operating in apartment buildings, under legislation announced on Tuesday.
The cap and increase in strata powers, which will be applied in Sydney, Wollongong, and Newcastle, was less than what some MPs were calling for, but more than what Airbnb would have liked.
The decision was due two weeks ago, however backbenchers were reportedly worried that the policy was too lenient on Airbnb and didn't give enough power to strata.
As the NSW Coalition government was meeting to decide the fate of Airbnb in the state, Airbnb awkwardly happened to be briefing journalists on its company policies.
Asked about the changes in legislation Chris Lehane, Airbnb's global head of policy and public affairs, said: "I understand there's always a balancing of stakeholders here. I do think from what I've heard and what I've seen that they've taken an innovative approach. I think they've taken an approach that is designed to balance those interests, and I think ultimately they're taking a fair, forward-looking and progressive approach."
Lehane said that only a minority of people make their properties available on Airbnb year-round, particularly in Sydney, where rental prices remain some of the most unaffordable in the country.
Airbnb claims the average annual income via Airbnb in Sydney is $3,700 against a national average of $4,500, and say this shows people are just putting their homes on Airbnb to supplement their income and help afford Sydney's rent prices, not to put it up full time.
Independent MP for Sydney Alex Greenwich said in a statement that allowing people to rent their properties for 180 days a year was too lenient.
"One-hundred-and-eighty days could easily be used as a commercial model and does not truly reflect the sharing economy," he said. "[It] could be all of summer and most weekends; it could be every weekend with a day or two on either side. Letting a home for 180 days a year in areas of high tourist demand could be more profitable than letting out to long term tenants."
According to Airbnb 29% of the adult Australian population, or five million people, are on Airbnb, up 19% from two years ago. In that time there has been a 50% increase in people using Airbnb in Sydney, and a 53% increase in people from Sydney staying outside of Sydney on Airbnb.