And even when it's legal, it's often not "by right". So you end up with restrictions against e.g. renting out both the main house and the ADU.
Not sure how popular this opinion is on here but I generally think we should be disincentivizing rental properties as long as we have a shortage in the housing market. Otherwise land and rental prices just rise because it makes more sense to rent than to sell. My naïve solution is something like "You pay 60% property tax on your primary residence and add 40% for each additional one". Then if you wanted to own and rent 8 houses you could but you'd be paying 300% property tax on the 8th house, which would change the incentives so it makes more sense to sell than to buy up properties and plan to rent them out
So you'd have the bottom 20th percentile unhappy because of the limits to their living situation, and the 80th percentile upwards unhappy because of the reduction in their rental income. I can't see it being politically viable.
Also as some others said it would need to be paired with building incentives to also make it easier for people to build homes, but in the short term the benefit would be incentivizing people to sell rental properties at a lower price and promote home ownership.
I agree people won't be happy about reduction in rental income, but I don't think we should be incentivizing people to use housing as a way to make money - that's basically going to guarantee that prices are higher than they should be because the whole goal is to profit from it.
To fix our housing issues we just need to make it easier to build homes. That is it.