The number of over 50s becoming 'live-in landlords' rises as lodger earnings reach four times the average UK pension pot

• The number of over 50s becoming live-in landlords has risen 41% in two years

• The number of 55-64 year olds taking in lodgers has soared by 93% in just two years – more than any other age group

• UK retirees could earn £128,639, and Londoners £176,341 by renting out just one spare bedroom in their retirement years

• Almost £100,000 (£97,750) of these earnings are completely tax-free

• The average UK pension pot is just £30,000 – the income from letting just one spare room is more than four times this4

The number of UK over 50s taking in lodgers and becoming 'live-in landlords' has risen by 41% in a two-year period, according to new data from the UK's biggest flat and house share site SpareRoom.co.uk.

The number of adults aged 55-64 years taking in lodgers almost doubled (up 93%) during the same period – more than any other age group. Meanwhile, 46% more Brits aged 65+ took in lodgers in 2013 than in 2011.

During their retirement years, over 65s could earn £128,639 by renting out just one spare bedroom and in London a staggering £176,341. That means those with two spare bedrooms to let could generate more than a quarter of a million pounds – £257,278 – in retirement, or a staggering £352,682 in London.

Moreover, almost £100,000 (£97,750) of these earnings are completely tax-free, due to the government's Rent A Room scheme threshold, which allows Britons to earn up to £4,250 per year from letting furnished rooms in their homes, without paying any tax.

The table below shows 10 cities (outside London) where people can earn above £100,000 during retirement from taking in one lodger:

Lodgers spareroomSource: SpareRoom.co.uk

Matt Hutchinson, director of SpareRoom.co.uk, says:

"Retiring from your career doesn't mean you have to stop making money. Monetising existing assets – such as renting out an otherwise under-used room – has no long-term liability for the estate, unlike equity release. Plus, it brings in more than four times the income of the average paltry UK pension pot. So there's no reason why retirees shouldn't find their entrepreneurial streak after bowing out of the workforce.

"There's far less stigma around taking in lodgers amongst the older generation, many of whom grew up in the post-war years when lodging was widespread. Many retirees find they get as much satisfaction out of the companionship of taking in lodgers as they do from the income.

"But if the government wants to improve the outlook for pensioners, it needs to drive awareness and further incentivise Brits to become live-in landlords by raising the Rent A Room Scheme threshold, which hasn't changed since 1997. This will also free up supply, and ease the now colossal demand on the rental sector as house prices rise to unaffordable levels. Our 'Raise The Roof' campaign calls on the government to raise the threshold to £7,500 per year to reflect UK rents."

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