I think the discussion comes around to controlling people's activities within their homes and on their land. If you own a home no one should be allowed to tell you who you can and cannot have over to your house and what type of home business you operate.
If they want to regulate something, which may be necessary, simply enforce already existing regulations and policies regarding noise and disruption. Who is the local government to tell you for how long you can or cannot rent out your home to to someone. Are they going to crack down on renting out a loft to a student too?