Londoners earn up to £200,000 by taking in a lodger

Homeowners could earn almost £200,000 by letting out a spare room, according to a study today.

The report found a room in the City, let out over the life of a typical 25-year mortgage, could recoup £194,000, making it the most lucrative location for lodgers in the capital. Flatshare website www.SpareRoom.co.uk found rooms in Kensington and Chelsea could bring in £172,000, while one in Islington could be worth £134,000.

The cheapest spare rooms in the capital are those let in Barking and Dagenham, which could earn just over £79,500. But this still compares well with the average across Britain of about £80,000. Matt Hutchinson, who directed the research, said: "With finances especially tight in London in the current climate, lodgers provide a major financial lifeline to mortgage borrowers.

"From the lodger's perspective this means there are relative bargains to be had in London's most salubrious districts. They can enjoy living in some of the best parts of town on the cheap."

The study analysed the cost of 45,000 rooms to let across Britain. The researchers found the average cost of renting a spare room in the City was £226 a week, £201 in Kensington and Chelsea and £157 in Islington.