German Federal Court Prohibits Profitable Subletting Model

The German Federal Court of Justice (BGH) has delivered a decisive ruling concerning the practice of subletting apartments for profit. The case involved a tenant in Berlin who sublet a rented property at a rate of 962 euros per month, while his own rental obligation was only 460 euros. The property owner objected to the arrangement, terminated the tenant's lease, and the dispute escalated to the nation's highest civil court.

According to the BGH, tenants are generally allowed to sublet their residences, but only with the explicit consent of the landlord. The court established that the primary intent behind allowing subletting is to help tenants preserve their living space when their circumstances change, such as during temporary relocations or financial difficulties. However, the court clarified that subletting should not serve as a means for tenants to generate personal profit.

The case centered on whether tenants could legally charge a higher sublet rate than their own rent, particularly when offering a fully furnished apartment. The tenant in question argued that the higher sublet price was justified due to the inclusion of furniture and household appliances. This is an area where the legal framework has previously lacked specific guidance, and tenant advocacy groups have acknowledged the absence of clear legislation on handling furnished sublets.

The BGH's decision did not focus on the legitimacy of charging an additional fee for furnishing. Instead, the court ruled that the substantial difference between the original rent and the sublet rate, regardless of the apartment's furnishings, constituted an impermissible profit. As a result, the tenant's appeal was rejected, and he was ordered to vacate the property in accordance with the lower court's decision.

This judgment sets a notable precedent for subletting practices across Germany, reinforcing the principle that subletting is permissible primarily for safeguarding housing, not for personal financial benefit. The ruling also places a clear obligation on tenants to seek and obtain landlord approval before subletting, and it highlights the illegality of profiting from such arrangements.

In response to the court's ruling, the Federal Ministry of Justice has indicated plans to introduce explicit regulations governing sublet pricing, particularly in cases involving furnished properties. Until such rules are adopted, landlords and tenants alike are advised to exercise caution and transparency when entering subletting agreements to avoid legal disputes and potential eviction.