The scheme is part of a slew of changes introduced by the West Australian government to boost the housing supply and regulate the growing short-term rental market.
Community groups say the strategy could double the state's rental housing supply but Airbnb and Stayz are not so sure.
WA Premier Roger Cook said the rules balanced the rights of property owners with community needs.
Premier Roger Cook said short-term rentals had made some local neighbourhoods and communities less desirable places to live.
"They have an impact upon the availability of long-term rental accommodation," he told reporters on Thursday.
Mr Cook said the new rules addressed the needs of the broader community, including the tourism industry and local government areas, while preserving landlords' rights.
All short-term rental accommodation providers will be required to register their properties by January 1, 2025 before being able to advertise and take bookings, including from online platforms such as Airbnb and Stayz.
Planning requirements in the Perth area will also be changed, with local government approval required for unhosted short-term rental accommodation that operates for more than 90 nights in 12 months.
Local governments in regional areas will determine when planning approval is required.
WA has introduced a slew of measures to boost housing supply and regulate short-term rentals.
The government has budgeted $2.7 million for the incentive scheme but said it was open to expanding it.
To qualify, property owners need to have had an entire property for rent on short-stay booking platforms within the previous six weeks.
Applicants will be required to provide a minimum 12-month lease agreement to new, long-term tenants with a maximum rent of $800 per week in Perth and $650 in the state's southwest.
Rules around short-term accommodation vary across the nation, with a levy in place in Victoria and an annual cap in NSW in Greater Sydney and some regional areas.Â
The popular coastal holiday town of Byron Bay will introduce a 60-day annual cap on short-term rentals next year.
WA Opposition housing spokesman Steve Martin said the scheme would not address the cause of the housing crisis - a lack of houses.
Queensland is considering creating a register of short-term rentals.
"Paying landlords to move their homes from the short-term rental market to a 12-month lease is nothing more than a short-term shuffle," he said.
Airbnb Australia public policy head Michael Crosby questioned whether the incentive scheme would be effective, saying short-term rentals were a small percentage of the total housing stock in WA.
"Housing issues have existed long before the founding of Airbnb and targeting these properties is not a long-term solution," he said.
Stayz government and corporate affairs director Eacham Curry raised concerns about the foreshadowed planning requirements.
"Some regional WA councils have already indicated they are considering onerous new restrictions that, if employed, will likely bring severe economic impacts to the local short-term rental market and by extension, the wider community," he said.
Shelter WA chief executive Kath Snell said there were about three short-term rentals for every private rental currently listed in WA.
"If these reforms incentivise just one-quarter of the Airbnbs into rental housing that will literally double the current rental supply," she said.
There were 1739 properties listed for rent in Perth in the week ending November 5, according to the Real Estate Institute of WA.
The Inside Airbnb data website shows there were 9641 short-stay houses and apartments listed for rent in WA on September 21.
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