BGH Subletting: Profit-Making Subletting Not Lawful – Landlord Rights Strengthened

Legal Basis for Subletting

Pursuant to Section 540 of the German Civil Code (BGB), a tenant may not transfer the apartment to third parties without the landlord's consent. An exception is provided by Section 553 BGB: If there is a legitimate interest—such as a work-related stay abroad or a changed financial situation—the tenant may demand permission to sublet.

The key point is: The legitimate interest must have arisen after the conclusion of the contract and must not be aimed at generating profit. This is precisely where the current ruling comes into play.

The Case Before the Federal Court of Justice (BGH)

A tenant had sublet his apartment at a higher rent than he himself was paying. The monthly profit amounted to several hundred euros. After this became known, the landlord terminated the tenancy.

The Karlsruhe judges upheld the termination: Profit-oriented subletting does not constitute a legitimate interest within the meaning of Section 553 BGB. The legislature intended to accommodate tenants in certain life situations—not, however, to enable a business model at the landlord's expense.

Why the BGH Prohibits Profits from Subletting

The reasoning follows clear logic: A lease grants a right of use, not entrepreneurial rights to the property. The landlord bears the economic risk—vacancy, maintenance, depreciation. When the tenant sublets the apartment at a higher rate, they profit from someone else's property without bearing this risk.

Particularly in cities like Munich, Frankfurt, or Hamburg, such profits can be substantial. Furnished apartments or Airbnb rentals often generate multiples of the existing rent. The court makes clear: Without an agreement with the landlord, this practice is impermissible.

Consequences for Landlords

The ruling gives landlords effective recourse. Pursuant to Section 573(1) and (2) No. 1 BGB, unauthorized subletting justifies termination of the tenancy. In cases of systematic, profit-oriented subletting, this can occur even without prior warning.

Practical recommendations:

• Establish clear provisions on subletting in the lease agreement from the outset
• If unauthorized subletting is suspected: secure screenshots of listings, document witness statements
• Request a written statement from the tenant

What Tenants Must Consider

The message is clear: Written permission from the landlord must be obtained before any subletting. As a rule of thumb: The sublet rent must not exceed the tenant's own rent payment. The tenant should be relieved of costs, not enriched.

Anyone who conceals material circumstances—such as the amount of the sublet rent—risks having the permission challenged or facing termination.

Unresolved Legal Questions

The BGH left two points undecided:

Furnishing surcharge:

Whether a reasonable surcharge for provided furniture is permissible was not decided. The Federal Government is planning a flat-rate regulation of five percent on the net cold rent.

Rent cap (Mietpreisbremse):

Whether the rent cap also applies to subtenancies remains open. Tenants should, as a precaution, orient themselves to local comparative rents.

Conclusion

The BGH ruling of January 28, 2026 creates legal certainty: Profits from subletting without permission constitute a breach of duty and justify termination. Landlords receive clear options for action; tenants must maintain transparency and must not pursue profit-making intentions. In cases of uncertainty, legal advice is recommended.