Germany’s Federal Court of Justice (BGH) has significantly strengthened tenant protection with its recent decision on subletting, reports the German Tenants’ Association (DMB). The BGH makes clear that the statutory right to sublet must not be misused to make substantial profits at the expense of subtenants or to circumvent the rent cap.
Hardship must not be exploited
In the case decided by the BGH, a tenant had charged his subtenant a net rent excluding service charges for a furnished flat that at times exceeded the rent he paid his own landlord by more than 500 euros. The BGH made clear that such a financial advantage is incompatible with the purpose of the statutory subletting rules. “The Federal Court of Justice has made it unequivocally clear: subletting serves to preserve housing, not to generate profit,” explains Melanie Weber-Moritz, President of the German Tenants’ Association. “Many people depend on subletting because they have no chance in the regular housing market. This hardship must not be exploited, either by landlords or by principal tenants.”
“High-quality furnishings” are not carte blanche
The decision is particularly significant because there are currently no statutory rules on furniture surcharges. Neither their calculation nor a ceiling is regulated, and there is no obligation to show them separately in the tenancy agreement. In the present case, the tenant had also argued that a substantially higher subrent was justified by allegedly “high-quality furnishings”. The BGH held that it was not. Furnishing a property is not carte blanche for arbitrary rent premiums. “With its decision, the BGH rejects a practice that the German Tenants’ Association has observed for years, particularly in tight housing markets: flats or individual rooms are increasingly being let furnished or partly furnished to circumvent the rent cap and charge significantly higher rents. The ruling from Karlsruhe is a very clear rejection of purely profit-driven letting at the expense of people seeking a home and shows how urgently statutory clarification is needed,” says Weber-Moritz.
Legislative initiative announced
The German Tenants’ Association therefore welcomes Federal Justice Minister Hubig’s announced legislative initiative to expressly regulate the furniture surcharge in the German Civil Code, set its permitted amount and require transparent disclosure in the tenancy agreement. “The proposed reform is an important and necessary step towards closing loopholes,” says Weber-Moritz. “The BGH has sent an important signal today. Neither furnishing nor subletting may be misused to circumvent the rent cap, because housing is not a commodity for maximising profit. It is now up to policymakers to put this signal into law.”
The “Haus & Grund Deutschland” owners’ association also welcomes the Federal Court of Justice’s decision on subletting. Landlords may terminate a residential tenancy with notice if tenants sublet a flat without permission and at a profit. This applies in particular if the subrent exceeds the rent-cap threshold.
“Subletting is not a business model. It is also a question of fairness. Private landlords have obligations, bear responsibility and incur costs; they should not have to stand by while third parties fraudulently misuse the tenancy,” comments Haus & Grund President Kai Warnecke.
[Federal Court of Justice, 28 January 2026, case no. VIII ZR 228/23]