Airbnb guests and hosts will be banned from short-term rentals for five years if they repeatedly disrupt neighbours in New South Wales.

New regulations passed state parliament on Tuesday night, introducing caps on the number of days a property can be leased and allowing owner stratas to impose bans in their apartments.

A mandatory code of conduct will also come into effect from next year in a bid to crack down on party houses.

Guests and hosts could be banned from all platforms for five years if they seriously breach the code just twice in two years.

A serious breach could include any behaviour interfering with “a neighbour’s quiet and peaceful enjoyment of their home”.

“It was crucial that our reforms supported the rights of neighbours to peacefully enjoy their homes and their neighbours,” Scott Farlow said in the second-reading speech on Tuesday night.

“The exclusion register is a tough but necessary measure to sent the message that anti-social and irresponsible behaviour related to short-term rentals will not be tolerated.”

Banned users would be added to the register to ensure they cannot “platform shop”.

If the complaints are specific to a property, that host could still be able to continue letting other properties.

Online platforms – like Airbnb and HomeAway, known as Stayz – would face civil penalties of up to $1.1 million for corporations and $220,000 for individuals if they don’t comply with the code.

Neighbours, strata committees and owner corporations would also be able to make complaints to adjudicators after hearing evidence from both sides.

Properties in Greater Sydney will be capped at having stays 180 days a year, unless it is the host’s primary place of residence.

There is no cap for the rest of the state, but councils will have the power to make a cap of no less than 180 days a year.

Owner’s corporations will also be able to pass by-laws to ban short-term letting in their block if it is not the host’s primary place of residence, and they get a 75 per cent majority vote.

Minister for Better Regulation Matt Kean said the reforms would encourage the sharing economy while putting an end to bad behaviour.

“Our plan is a win-win. It acknowledges the huge financial contribution online booking platforms make to the NSW economy, but also takes a zero-tolerance approach to raucous guests,” he said in a statement on Wednesday.

“It’s great to see these sensible reforms pass through parliament, giving certainty to the industry, to all involved.”

Airbnb supports the reforms, providing clarity and certainty and reaching a middle ground.

Airbnb Australia said the reforms found the right balance and gave certainty to owners.

“The NSW government has recognised the way people travel and use their homes has changed and the rules needed to change as well,” Country Manager Sam McDonagh said in a statement.

“The NSW government’s fair and balanced laws will protect people’s rights and support healthy tourism. We are committed to working collaboratively to implement these new laws.”

There are 57,000 properties in NSW listed on Airbnb, representing more than one-third of Australian users.

There were 1.6 million Airbnb guests in the state last year.

HomeAway said the reforms go “some way to providing the sector with the certainty it needs”, but said there should be a registration scheme for all hosts.

“Packaged with the mandatory code of conduct, a proper registration system will ensure that home owners subscribe to the ground rules for listing a property, and will give the wider community more certainty that complaints about noise, overcrowding or anti-social behaviour will be dealt with swiftly and decisively,” HomeAway director of corporate and government affairs Eacham Curry said.

He said that would be “more flexible, agile and responsive”.

HomeAway also wanted a three-strikes rule instead.

The legislation will be reviewed after 12 months.