BGH Puts a Stop to the "Airbnb Business Model": No Profit-Making Through Subletting

What tenants and landlords need to know – and why this ruling will shape the housing market for years to come

On January 28, 2026, the German Federal Court of Justice (BGH) handed down a landmark ruling (Case No. VIII ZR 228/23) that is likely to affect millions of tenancies across Germany: tenants who sublet their apartments are not permitted to make a profit. Subletting at a price higher than one's own rent does not give rise to a claim for subletting permission – and may even result in termination of the tenancy.

The Case: A Two-Room Berlin Apartment Turned Lucrative Side Business

A tenant had been renting a two-room apartment in Berlin since 2009 at a net cold rent of €460 per month. When he left Germany for an extended stay abroad in early 2020, he sublet the apartment to two subtenants – at a net cold rent of €962, more than double what he himself was paying. Including advance payments for utilities and heating, the subtenants were actually paying €1,100 per month. The tenant had not sought the landlord's permission before doing so.

When the landlord discovered the arrangement, she issued a formal warning and ultimately terminated the tenancy with proper notice in February 2022.

The Decision: Profit-Making Is Not a Legitimate Interest

The Charlottenburg Local Court initially dismissed the landlord's eviction claim, ruling in favor of the tenant. However, the Berlin Regional Court reversed this decision and found for the landlord. The tenant's appeal to the BGH was unsuccessful.

The VIII Civil Senate of the BGH stated unequivocally: there is no legitimate interest in subletting within the meaning of Section 553(1) sentence 1 of the German Civil Code (BGB) where the tenant earns a profit exceeding their own housing-related expenses. The landlord may therefore refuse consent to the subletting arrangement. Without such consent, the tenant has no right to sublet (Section 540 BGB). The tenant's breach of this rule justifies termination of the tenancy on grounds of a significant and culpable violation of contractual duties (Section 573(1), (2) No. 1 BGB).

The Reasoning: Subletting Exists to Preserve Housing, Not to Generate Profit

The BGH grounded its decision in a comprehensive interpretation of Section 553 BGB and reached a clear conclusion: the statutory framework for subletting serves solely to allow tenants to retain their apartments when their personal circumstances change significantly - for instance, during a temporary stay abroad or a shift in family situation.

The legislature, however, never intended for this provision to enable tenants to profit from subletting. This is evident from the legislative history and reflects the necessary balance between the landlord's property rights and the tenant's possessory rights, both of which are protected under the property guarantee of Article 14(1) of the German Basic Law (Grundgesetz).

While case law has long recognized that tenants may reduce their own rent burden through subletting, this does not mean they may generate income exceeding their own costs.

An interesting aside: the BGH left open the question raised by the Berlin Regional Court as to whether a violation of Germany's rent cap rules (Mietpreisbremse) might also preclude a claim to subletting permission. In this case, the profit motive alone was sufficient to deny the tenant any right to sublet.

Analysis: A Landmark Ruling with Far-Reaching Implications

This decision carries considerable practical significance for several reasons.

First, the BGH provides legal certainty on a previously contested issue. Courts and commentators had long debated whether – and to what extent - landlords are entitled to know the terms of a sublease. Some courts held that landlords had no business inquiring into the income a head tenant derives from subletting. The BGH has now rejected this view.

Second, the ruling directly impacts numerous business models. In recent years, particularly in major cities, it had become common practice to sublet cheaply rented apartments at significantly higher prices through platforms like Airbnb or WG-Gesucht. This practice is now unambiguously unlawful – meaning landlords have grounds to terminate leases where they have not consented to subletting.

The rules are even stricter for short-term tourist rentals: under established BGH case law, there is no entitlement to subletting permission for daily rentals to tourists, as this form of use differs fundamentally from ordinary subletting. Even a general subletting permission does not cover short-term tourist lets - and landlords may typically terminate such arrangements without notice.

Third, the ruling also protects subtenants from inflated rents, a point the BGH expressly emphasized.

Fourth, some legal uncertainty remains in the details. The BGH explicitly left open how cases should be handled where the tenant provides additional services, such as furnishing the apartment. In this particular case, the appellate court found that such services did not justify the substantial gap between the head rent and the sublet rent. However, how to assess situations where additional services might genuinely offset a higher price remains an open question.

Conclusion: Is the Tenant-as-Middleman Model Finished?

The BGH's ruling sends a clear message: another person's apartment is not a speculative asset. Anyone who sublets may, at most, cover their own costs – but not profit from others' housing difficulties. With this decision, the BGH firmly supports socially responsible housing use and delivers a decisive rebuke to the profit-driven subletting business model.

Practical Guidance

For landlords, this ruling means you should review subletting arrangements carefully. If you receive a subletting request or learn of an existing arrangement, inquire about the sublease terms. Where the sublet rent significantly exceeds the head rent, you may refuse permission. For ongoing sublets at inflated prices, a formal warning followed by termination may be appropriate.

For tenants considering subletting: the sublet rent should not exceed your own costs. Whether a reasonable surcharge for furniture provided along with the apartment is permissible remains unclear, so caution is advised. If you plan to sublet during a stay abroad or other temporary absence, discuss the terms with your landlord beforehand and obtain written permission. Subletting without permission – especially at inflated prices – risks losing your apartment entirely, as this ruling makes clear.

For subtenants, there is reason for cautious optimism: you may be better protected from excessive pricing by head tenants in the future.

Do you have questions about subletting, need to review a subletting arrangement, or want to take action against an unauthorized sublet? Get in touch – our tenancy and real estate law team is here to help.