Government regulations should be created to protect the health and safety of a community — the color of a home or number of bedrooms in it impacts neither of those.
While private universities have the right to impose limits on the free speech opportunities of their students, government-funded universities must allow students to exercise their rights to speech without any intervention unless there is actual harassment or legitimate danger to public safety.
When the permitting process is too complicated, too expensive, or takes too long to accomplish, it's more than just a headache—it can be downright dangerous.
Should people be able to rent out a portion of their home on a short term basis? There's no reason to prohibit it and coming out of COVID-19, people may need to.