yes, but there won't be a fire and nobody will die.
How many dinner parties have you been to at which anybody died? or at which a fire broke out? putting on an acoustic folk gig in your house is no more likely to result in any kind of accident than having a party in your house will.

It'd be great if house parties were exempt from having to obtain a live music license. But only if this exemption meant I didn't have to pay anything or notify anyone.

If I had to do that, I could just put it on in the pub down the road instead. The whole point for me about house gigs is that you don't have to pay anything to anyone (except the performers) and you don't have to ask anyone's permission. The second you have to do anything else is when I'd start to lose interest. Sure, it's illegal. But so are a lot of harmless things.