If it is ilegal they can come and lock me and the Mrs up as we have 5 children , and until they started to leave home they were all i the same house. Thy used to have friends over for 'sleepovers' as well so some times there were 7 in our house.
We still often have 3 when the grandkids come to stay.
If you are on the housing list it would probably give you more points for having children living in a studio flat, not sure its illegal though, unsuitable yes..