He will also have greater expenses as he ALSO needs to pay for his place to live.

He has no greater expenses, because the tenant pays all his "investment" costs. The BTL makes his profit from capital gains.

Which needs not be a bad thing where there are too many owner-occupied houses...

No...

Then address the bubble, but not the idea of buying to let. Banning buy-to-let, in the long run, means that there will be no rental market at all.

Who needs rental market? Some CEO's in business trips? Labour families don't need them.

But in general, I don't see how having lots of owner-occupied houses is a nice goal per se.

Why not?