Then we can let the short/long term rental market sort itself out and also allow people to invest in real estate at a reasonable rate.
Given that we probably won't fix that, I think that if you want to operate a B&B, you should be allowed to operate a B&B, but if you are going to get out of the business of operating a B&B, you should have a cool down period of 3-5 years (enough for the operator to take on real market risk).
That means that the business must only be in the business of operating as a B&B and until that cool down period ends, and then can be converted back into a residence. This is a non-trivial amount of time, and it means that people in the business of short-term rentals can't necessarily just causally operate them, because if there is a housing slump, they won't be able to exit their position quickly.
This is a massive disincentive to folks trying to operate a B&B to facilitate asset appreciation, but is not a significant impediment for people who want to operate a B&B as a going concern.
This solution invites all kinds of problems, like black and grey markets for housing, but that's because this isn't a real solution. The real solution is to just legalize density and let people build as many residences as they want on property they own. It also helps to have a property tax that incentivizes maximal utility of real estate and disincentivizes hoarding.
https://www.coreysdigs.com/real-estate/who-really-owns-the-u...
These estimates are for entities owning more than 1000 homes.
When they are "removed" and owned by more people, presumably this is a more efficient allocation of the same amount of houses to more people, which is a solution for the housing problem.