should people be able to rent out rooms in their home?

[True Federalist (진정한 연방 주의자)]

As a general rule yes.  However, there are a few high-density/limited transport metro areas where there is a need to ensure that renters aren't forced to become commuters.  So for places like San Francisco, Manhattan, Venice, etc., there is a need. In US terms, if you don't have to file a Schedule E with your 1040, then yeah you should be able to rent.  (Note that means you rent at most two weeks per year, but you don't have to pay income tax on it either.)