Tenants cannot make profit from subletting, German court rules

The Federal Court of Justice (BGH) has ruled that tenants subletting their room or home in Germany cannot make a profit from subtenants’ rent.

BGH rules on subletting case

A ruling from the Federal Court of Justice in Karlsruhe, Baden-Württemberg, is expected to have implications for tenants all over Germany.

The case concerned a tenant who sublet their two-room apartment in Berlin without permission from their landlord. The tenant was paying 460 euros per month before utility bills, but charging the subtenants 962 euros per month. 

The landlord discovered that the tenant was illegally subletting and cancelled the rental contract. Initially, the Charlottenburg District Court in Berlin dismissed the landlord’s eviction suit in 2022. 

After an appeal, the Berlin Regional Court upheld the eviction ruling. The Berlin court also ruled that the tenant was charging the subtenants well over the maximum rent in the local area, which is 748 euros per month. This amount is determined by the rent brake (Mietpreisbremse), which regulates rents in 410 municipalities considered to have a strained housing market.

Eventually, the tenant appealed the Berlin court ruling at the BGH in Karlsruhe, the highest civil court in Germany. But the BGH has not ruled in the tenant’s favour. The court ruled that "The purpose of subletting [...] is not to provide the tenant with an opportunity to make a profit." This means the eviction order can be upheld.

What does the subletting ruling mean for renters?

With Germany facing an affordable housing shortage, it is common for those who have an affordable rental contract to rent out their room or flat while they go away for a short while. Tenants first have to ask permission from the landlord, but there are limitations for when the landlord can reject the request.

In some cases, tenants paying affordable rent exploit the affordable housing shortage, and rent their place out for a longer period of time or charge tenants over the local rent limit. This practice is quite common in large German cities. It means that subletters have somewhere to live, but the initial tenant never passes on full legal rights to the subtenant, who might be paying over the local rent limit.

So what does the ruling from Karlsruhe mean for tenants and subtenants? The ruling sets a legal precedent on which subtenants can rely if they would like to challenge the tenant who is charging them rent.

Subletters can use the rental index (Mietspiegel) to find out whether they are being charged over the local maximum rent. However, in many cases, subletters don’t have the right to stay in an apartment beyond the contracted period, so they might be reluctant to challenge the main tenant for fear of eviction.

In any case, tenants and subtenants can join and contact their local tenants association (Mietverein) to find out what their rights are and how to enforce them. Tenants in Berlin can also contact the Rent Price Review Office (Mietpreisprüfstelle) hotline.