January 30: Germany’s BGH Bans Profit on Subletting, Landlords Gain
The BGH subletting ruling clarifies that tenants in Germany may not earn a profit from subletting and landlords can terminate leases if they do. The government is also preparing a uniform 5% furniture surcharge to standardize furnished rent pricing. For investors, the decision supports rent integrity, reduces arbitrage risk, and modestly strengthens enforcement. We explain what changes now, how costs may shift, and why this matters for Germany rental law and listed housing exposure.
What the Decision Changes in German Rentals
Germany’s top civil court confirmed that tenants cannot profit from subletting. If a tenant still does, the landlord may terminate the lease. This curbs rental arbitrage and aligns subrent with the main rent. The practical effect is a stronger contractual position for owners across major cities. See overview reporting by Tagesschau for context and reactions BGH-Urteil: Gewinnbringende Untervermietung nicht rechtens.
We expect more written approvals, clearer subletting terms, and disclosure of subrent levels to avoid disputes. The BGH subletting ruling increases scrutiny on whether a subrent reflects the tenant’s own contractual rent and actual costs. Documentation will matter, especially in Berlin, Munich, and Hamburg, where subletting is common. Tenants who cannot align numbers risk warnings and, in repeated cases, termination.
Investor View: Pricing, Vacancy, and Enforcement
The BGH subletting ruling limits layered profits that can distort price signals. By pushing subrent closer to the main rent, landlords can defend agreed pricing and reduce arbitrage churn. That supports rent integrity and potentially steadier tenant mixes. For residential landlords, we see a marginal positive effect on collections and a lower risk of informal, unapproved rent markups.
Short term, owners may spend more on checks, notices, and standard letters. Terminations should remain rare but are now a credible option when profit appears. Over time, fewer arbitrage cases can reduce disputes and vacancy tied to subletting conflicts. Net impact looks neutral to slightly positive for margins, with better rule clarity and lower reputational risk.
Uniform 5% Furniture Surcharge in the Works
The government is preparing a uniform 5% furniture surcharge for furnished rentals. A simple example: a €1,000 base rent would allow a €50 monthly furniture charge. A fixed rate can reduce arguments about itemized furniture values and support consistent pricing. This also gives tenants and landlords a common reference when assessing fair subrent.
A predictable 5% benchmark narrows room to inflate furniture fees to mask profit. That complements the subletting profit ban by separating rent for space from compensation for furnishings. For cities with large furnished segments, a flat rate can stabilize negotiations, streamline contracts, and reduce room for dispute about what counts as reasonable furniture costs.
What Landlords and Tenants Should Do Now
Review subletting clauses, update approval templates, and ask tenants to state subrent amounts in writing. Keep a simple checklist for documentation. Use the 5% furniture guidance as a working benchmark once formalized. Train property managers to spot red flags and escalate only with counsel. The BGH subletting ruling supports consistent, data-based decisions.
Request written consent before any sublet, keep records of costs, and avoid any margin over your own rent share plus reasonable furniture charge. If unsure how to do it correctly, see practical Q&A from Berlin coverage Darf ich meine Wohnung jetzt noch untervermieten – und wie geht’s richtig?. Breaches can trigger warnings and, in serious cases, termination.
Final Thoughts
For Germany’s rental market, the BGH subletting ruling closes the door on profit-making sublets and backs landlords’ right to terminate when profit occurs. Combined with a planned 5% furniture surcharge, pricing should become clearer for furnished housing. We expect fewer arbitrage cases, better documentation, and steadier cash flows for residential owners. Investors should watch implementation details by city and any guidance on proof standards. Practical next steps: standardize consent forms, track subrent levels, and use clear examples to explain fair charges. Clarity now reduces disputes later and supports a healthier, more transparent rental system.
FAQs
What is the BGH subletting ruling?
Germany’s top civil court decided that tenants cannot earn a profit from subletting. If they do, landlords may terminate the lease. The ruling curbs rental arbitrage and supports rent integrity. It also encourages clearer documentation of subrent amounts and costs, making enforcement easier under Germany rental law.
Can landlords terminate if a tenant profits from subletting?
Yes. If a tenant makes a profit from subletting, the landlord may terminate the lease. The ruling strengthens landlord rights Germany by providing a clear response to profit-making sublets. Termination should follow proper notices and documentation to show the profit and the extent of the breach.
How will the 5% furniture surcharge work?
The government plans a uniform 5% furniture surcharge for furnished rentals. For example, on a €1,200 base rent, the surcharge would be €60. A fixed rate reduces disputes over furniture valuation and helps align subrent with actual costs, complementing the subletting profit ban.
What does this mean for investors in German housing?
We see a marginally positive effect. The BGH subletting ruling reduces arbitrage risk, supports stable rents, and clarifies enforcement. Compliance work may rise in the short term, but fewer disputes and cleaner documentation can improve predictability. That is supportive for risk management in listed residential portfolios.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
