As I've already said - it won't be allowed legally. But unless your neighbors are going to turn you in - if they even know - you should be able to fly under the radar as long as you don't do anything outrageous. If you try to get permission and are told no - you will be on the radar and won't be able to do it.
No idea why you are concluding it won't be allowed legally; different municipalities have diffferent codes. As said I lived in a converted, permitted shed in college.
I would worry about permanent habitation in a non-permitted structure and hoping that you can just 'fly under the radar'. It's amazing to me how catty neighbors can be about who is 'following the rules' and there's little recourse from a single anonymous phone call to the local zoning board.
I think in most cases "not having running water" and "no electricity" are deal breakers when it comes to building code. (Silly, since you can camp in a tent, but not in a building with 4 walls and a roof.) Did your college shed have plumbing/electricity?
It did - my landlord pulled a permit and installed a toilet and sink. As I said it was really nicely done, and for just a few hundred$ in parts and a week's labor. Depending on kind and location of the shed, the local muni code and one's DIY abilities this may or may not be possible.
I did, however, know others who get tossed out of their non-permitted dwellings. In at least one case the city forced the landlord to tear down the structure entirely (no option to go back to using it as 'just a shed').
Agree it's silly given the tent analogy... but trying to skirt local laws can cause financial pain and offers little recourse.
