It would fall foul of the profiting from the proceeds of prostitution.
A similar thing happens in HK. People buy shitty Tong Lau flats in urban centres and subdivide them into one woman brothels. A 350sqft flat can be split 4 or 5 ways and made into 5 mini brothels each with a small shower and bed area.
It works in HK because of the extreme land shortage. The fact that everybody in HK uses public transport meaning there are concentrations of WGs around transport hubs. Get off the MTR in HK and within 200m you will see pink lights indicating a WG flat. Same deal in Korea bus hubs, train hubs all have mini RLD nearby.
However it depresses the property values massively and therefore residents try to get them kicked out. Champagne Court in TST HK is a prime example. Was a residential area. Then some factories moved in, then a few WG flats popped up. Then whole floors got turned into WG flats. This interspersed with residential flats.
So you get 100s of men walking around mixed use high rise mini cities. The residents understandably hate it and move out which causes more WG flats to be made.
The UK is bigger, everybody has cars and there is a lot more property and therefore choice of location. Therefore there is no USP of having a WG property.