yes max of 7.5 people, but it also depends on who's living there, if they are married couples, babies or teenagers and what sex they are and the size of the floor area !
There are no hard and fast rules concerning overcrowding, i take it your in-laws would share one room, you and your hubby another, and you would expect the 2 teenagers to have their own room and not share with a married couple !.so 4 bedrooms are required.
Permitted Number of Persons
Having regard to the overcrowding legislation contained within the Housing Act 1985, which allows the following amount of minimum floor space per person in each room
Floor Area --------------------- Number of Persons
4.645sqm – 6.503sqm ------ 0.5
6.503sqm – 8.36sqm ------- 1
8.36sqm – 10.219sqm------- 1.5
10.219sqm and over ------ 2
but there is a risk of refusal if the ECO believes your home is only 3 bedrooms,therefore all 6 of you cant share 3 bedrooms, and as most families do not use the lounge as a bedroom. it could be inappropriate for you to do that as well especially if you intend to stay there for a long time.
borderline if you ask me, could go either way