Permission denied when trying to access file on Apache - php

Question

I try to run very basic php app using apache and docker compose and have a problem with apache settings. When I try to access any static file in subdirectory I get lack of permissions. PHP calls seem to work fine.
So:
when I try to request localhost/LICENSE.txt I get the license.
when I try to access localhost/test.php or localhost/app/test.php it works fine
when I try to access localhost/app/test.html I get Forbiddenin
the browser andclient denied by server configuration:
/var/www/localhost/htdocs/src/app/test.html` in error log
Of course files I try to request are in the right locations.
Here's apache version I am trying to run:
/var/www/localhost/htdocs # httpd -v
Server version: Apache/2.4.33 (Unix)
Server built: Mar 27 2018 11:32:10
Here's my host config:
<VirtualHost *:80>
ServerAdmin test#example.com
DocumentRoot /var/www/localhost/htdocs/src
ServerName schmidt.local
<Directory "/var/www/localhost/htdocs/src">
#
# AllowOverride controls what directives may be placed in .htaccess files.
# It can be "All", "None", or any combination of the keywords:
# AllowOverride FileInfo AuthConfig Limit
#
AllowOverride All
#
# Controls who can get stuff from this server.
#
Require all granted
RewriteEngine On
</Directory>
<LocationMatch "^/(.*\.php(/.*)?)$">
ProxyPass fcgi://php-fpm:7000/var/www/localhost/htdocs/src/$1
</LocationMatch>
</VirtualHost>
So as you can see I already have request instead of allow as suggested here.