why is it not permissible to rent to family members if you own a house and your grown child?

Not sure but I starred all 3 of your questions. :) You might want to have a consultation with an Attorney to see if you could go a different route. Maybe even gifting them a portion of the money out of equity in the house since loans are less than 3% right now. A lot of variables to weigh.

Edit: From what you shared to me in a private message it is not about being dishonest or "manipulating" anything as a couple of your answers seem to assume. I think it is just confusing as to what you are trying to tell us but I will let you edit on this.

You keep asking the same question over and over. It is in violation of the Section 8 policy for a landlord who agrees to abide by those rules, to rent to a family member or relative. If you rented to a family member with a voucher, the county would not pay and the person will lose their voucher for violating Section 8 rules.

Because if you own a house your grown child can live in, s/he doesn't need section 8!

You have a responsibility to support your family. The taxpayers don't.

So, you need the government to pay you rent so your child can live in your house?

Family is supposed to help family.

Af far as HUD is concerned, manipulation of rent and no evidence of an "arm's length" transaction.