It's a guest house, in their yard. Yes I understand that yard is probably larger than most, but the definition doesn't change just because it's a rich neighborhood. And the point is this isn't some house bought in some working-class neighborhood to make money off rentals while driving up prices and gentrifying the area, it's a guest house on a property the family already owns and lives on. Hence why the "late stage capitalism" tag seems like a bit of a stretch.

Interesting that lacking a rental permit is somehow grounds for continuing to have someone living on the property rather than further grounds for eviction. I wonder if you'd apply the same logic to a room you listed on AirBnB to make some extra money off unused space without researching permits requirements.