BGH ruling on subletting: making a profit from subletting may be unlawful – what does this mean for tenants?
The Federal Court of Justice (BGH, VIII ZR 228/23) has clarified: a tenant is only entitled to permission to sublet under § 553 BGB (German Civil Code) if they have a legitimate interest – not in order to make a profit from the sublet.
Check your rent for freeWhat does this mean for you?
As a tenant, you are entitled under § 553 (1) BGB to permission to sublet if you have a legitimate interest – for financial or personal reasons, for example. Following the BGH ruling VIII ZR 228/23, this interest must be genuine and plausible. If your sole aim is to make a profit from the sublet, the landlord may refuse permission. Subletting remains permitted if you want to cover your housing costs or have a legitimate reason to let part of your flat to someone else.
The key points in brief.
For many tenants, subletting is a practical solution – for example during a longer stay abroad or because a room has become free. The BGH has now clarified the limits: the statutory right protects your interest in living in your home, not your interest in making a profit.
The case number
The legal basis
The core finding
The consequence
What was the Berlin case about?
The proceedings arose from a tenant's wish to sublet part of his flat, or the entire flat, to a third party on a temporary basis. The dispute was whether the tenant could demand the landlord's permission to do so – and whether his interest was a legitimate one within the meaning of the law.
The heart of the dispute: can a tenant enforce a right to permission to sublet if his main aim is to generate a financial surplus from the sublet? The court had to clarify where the line runs between a housing and cost interest worthy of protection and a pure intention to make a profit.
The specific details of the facts – the size of the flat, the amount of sublet rent demanded and the exact contractual set-up – matter less for the core finding than the legal standard the BGH has set. [to check: exact facts and procedural history to be added by lawyer.]
The starting point
A tenant wanted to sublet all or part of his flat and relied on his interest under § 553 BGB.
The point in dispute
Was there a genuine legitimate interest – or was it essentially about making a profit from the sublet?
The landmark aspect
The BGH used the case to sharpen the standard for a “legitimate interest” – with effect well beyond the individual case.
What the BGH decided: § 553 BGB and the “legitimate interest”.
The court's reasoning can be followed in a few steps – from the wording of the statute to the practical limit for tenants.
The statutory right
§ 553 (1) BGB entitles the tenant to have the landlord permit the subletting of part of the flat – provided a legitimate interest arises after the tenancy agreement has been concluded.
What a “legitimate interest” is
The term is broad and covers both personal and financial reasons – such as reducing your own housing costs, a temporary stay abroad or a room that has become free. What matters is a plausible, genuine reason.
Where the line is drawn
According to the BGH, there is no legitimate interest if the tenant's essential aim is solely to make a profit from the sublet. The protective purpose of § 553 BGB is housing, not generating profit.
The consequence in practice
If the sublet evidently serves only to generate a profit, the landlord may refuse permission. Anyone who sublets without permission is in breach of contract. [to check: adopt the exact wording of the court's reasons – lawyer.]
Could you be paying too much rent yourself?
When subletting is still permitted.
The ruling by no means calls subletting into question as such. For the vast majority of tenants, little changes: anyone with a genuine housing or cost interest keeps their right to permission. The following situations are typical examples.
Part of the flat
Letting a room to a flatmate while you continue to live in the flat yourself is the core scenario covered by § 553 BGB.
- Flatmate moves out
Reducing your own housing costs
If you want to cushion the running costs of the flat through a sublet, you are pursuing a recognised financial interest.
- Relief from rising costs
- Covering costs, not making a profit
Temporary absence
During a fixed-term stay abroad or a change of job, your interest in subletting in order to keep the flat may be legitimate.
- Semester abroad, secondment
- Clear intention to return
What “covering costs” means – and where the profit margin begins.
The key distinction is simple: does the sublet rent cover your proportionate costs – or are you taking in noticeably more than the space you let out costs you? The following purely illustrative examples show the difference. The figures are deliberately simplified and are not legal thresholds – what counts in each case is the overall picture.
Note: as a subtenant, you must not be overcharged either.
If you yourself live as a subtenant in a flat-share or rent a room, your rent may also be subject to legal limits. In areas covered by rent control (Mietpreisbremse), there are caps on the rent – check for free whether you are paying too much.
Risk of termination and eviction
Anyone who sublets without the required permission or with a profit motive is on thin ice. Tenants should be aware of this – whether they are the main tenant or a subtenant.
What subtenants and main tenants should bear in mind now.
A few clear steps will keep you on the safe side – whether you are subletting or living as a subtenant yourself.
Obtain permission in writing
Ask your landlord for permission before subletting and state your legitimate interest specifically – for example cost relief or a temporary absence.
Set a reasonable sublet rent
Base it on the proportionate costs of the space you are letting out. A visible profit mark-up may jeopardise your right to permission.
As a subtenant, check your rent
If you live as a subtenant yourself, your rent may be too high in areas covered by rent control. Have it checked for free.
Don't ignore a formal warning
If your landlord responds with a formal warning, act promptly – for example by obtaining permission after the fact or adjusting the sublet rent – to avert termination.
Are you paying too much as a tenant or subtenant?
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Frequently asked questions about BGH ruling VIII ZR 228/23
Is subletting now banned following the BGH ruling?
No. Subletting remains possible in principle. The BGH has merely clarified that the statutory right to permission to sublet under § 553 BGB requires a legitimate interest. This is lacking if the tenant's essential aim is solely to make a profit from the sublet. Anyone with a genuine housing or cost interest keeps their right.
What is a “legitimate interest” under § 553 BGB?
The term is broad and covers personal as well as financial reasons that have only arisen after the tenancy agreement was concluded. Typical examples are reducing your own housing costs, a room that has become free, a flatmate moving out or a temporary absence for work. What matters is a plausible, genuine reason – not the mere intention to generate income.
Am I not allowed to make any surplus at all from the sublet?
Under the ruling, the legitimate interest may no longer apply if the sublet evidently serves solely to generate a profit. A small mark-up is not automatically unlawful – it depends on the overall picture and your actual interest. If in doubt, base the sublet rent on the proportionate costs of the space you let out and seek legal advice for larger amounts. [to check: permissible margin to be specified by lawyer.]
What happens if I sublet without permission?
Subletting without the required permission is generally a breach of contract. The landlord can issue a formal warning and, if the tenant does not respond, terminate the tenancy in the worst case. Once the main tenancy agreement is terminated, the subtenant also loses the basis for living in the flat. So always obtain permission beforehand.
Can my tenancy be terminated because the sublet rent is too high?
Termination for unauthorised or profit-oriented subletting generally requires a prior formal warning. If you respond to a formal warning – for example by obtaining permission after the fact or adjusting the sublet rent – escalation can often be avoided. If in doubt, seek individual advice. You can find out more about the requirements for termination by the landlord on our page on termination by the landlord.
I live as a subtenant in a flat-share myself – does this affect me?
The ruling primarily concerns the relationship between the main tenant and the landlord. As a subtenant, however, you should be aware that your rent may also be subject to caps in areas covered by rent control. Check for free whether you are paying too much – find out more on our page on reducing your rent in a flat-share.
Does the ruling also apply if I want to sublet the whole flat?
By its wording, § 553 BGB concerns letting out part of the flat while you continue to live there. For subletting the whole flat, somewhat stricter standards apply in part. The BGH's core message – legitimate interest rather than pure profit motive – is nevertheless an important guiding principle here too. [to check: clarify part vs. whole-flat subletting – lawyer.]
Is this article a substitute for legal advice?
No. This article explains the ruling in plain language and is no substitute for individual legal advice. You can use our service at any time for a free check of your rent under the rent control rules.
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Calculate your savings nowLast updated: October 2026. This article is for general information only and is no substitute for legal advice in individual cases.