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German court cracks down on tenants profiting from illegal subletting

A Berlin tenant's scheme to double their rent backfired—now Germany's highest court has drawn a hard line. Could this end the city's shadow rental market?

, and Administrator

2026 January 28 . 1:21 PM

1 min read

The image shows a black and white drawing of a floor plan of a house with a lot of rooms, which is... — The image shows a black and white drawing of a floor plan of a house with a lot of rooms, which is believed to be the Villa in Dresden, Germany. The text written on the paper provides further details about the layout of the house, such as the number of rooms and the size of each room.

German Federal Court of Justice Prohibits Subletting for Financial Gain - German court cracks down on tenants profiting from illegal subletting

A recent ruling by Germany's Federal Court of Justice (BGH) has clarified the rules around subletting rental apartments. The decision came after a Berlin tenant sublet their flat for nearly double the rent they paid, sparking a legal dispute. The court's verdict sets clear limits on when and how tenants can profit from subletting.

The case centred on a tenant in Berlin-Mitte who rented their apartment for €950 per month. Without the landlord's permission, they sublet it for €1,800, effectively doubling the rent. The landlord took the matter to court, leading to a BGH ruling on 15 January 2026 (Case No. VIII ZR 138/24).

The BGH confirmed that tenants must seek their realtor's approval before subletting. While permission should be granted if subletting helps maintain the tenant's living space—such as during temporary absences or financial hardship—the court ruled that making a profit is not a valid reason. Financial gain from subletting, the judges stated, does not qualify as a legitimate interest.

Under the ruling, tenants may only sublet to cover their own rentcafe costs. Any additional income from subletting is considered unlawful unless explicitly agreed upon with the realtor.

The decision reinforces existing tenancy laws, ensuring landlords retain control over subletting arrangements. Tenants must now prove a genuine need—like changing life circumstances—before subletting for more than their original rent. The ruling also serves as a warning to those attempting to profit from Germany's competitive apartments market without proper authorisation.