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Tax & Depreciation Letting

Subletting in Germany: When Landlords Must Consent 2026

Last updated: 2 September 2026 · Reading time approx. 8 minutes

“I would like to sublet one room.” For many landlords that sentence triggers a reflex: refuse, it says so in the tenancy agreement. The reflex is expensive. For part of a flat the tenant has, under certain conditions, a genuine claim to permission — and a landlord who refuses without grounds risks not only a lost lawsuit but the departure of a paying tenant. This article shows where the line between § 540 and § 553 BGB (Bürgerliches Gesetzbuch, the German Civil Code) runs, which three grounds carry a refusal, when a subletting surcharge is admissible, and what the whole thing means for your tax return.

Two provisions, two entirely different positions

The most common mistake happens before any substantive assessment: the two provisions involved sound almost identical but lead to opposite results. All that matters is whether the whole flat or a part of it is to be handed over.

SituationProvisionYour position
The whole flat is handed over — the tenant moves out completely and gives the flat up. § 540 (1) BGB You decide freely. Without the landlord’s permission the tenant is not entitled to permit a third party to use the property. There is no claim to your consent here — but there is a right of termination for the tenant, see below.
Part of the flat is handed over — the tenant formally stays in. § 553 (1) BGB The tenant may demand permission from the landlord where a legitimate interest arose after the contract was concluded. All that is left for you is to check whether one of the three statutory exceptions applies.
The contract will not help you here. Under § 553 (3) BGB an agreement deviating to the tenant’s detriment is ineffective. A clause banning subletting outright, or making it dependent on your unfettered discretion, has no effect in residential tenancies. You cannot draft the claim away — you can only assess the statutory exceptions.

What “part of the residential space” actually means

This is the junction where most people take the wrong turn. Intuitively you would say that a tenant leaving for eighteen months abroad is handing over the whole flat — so § 540 BGB, so a free decision. The Federal Court of Justice (Bundesgerichtshof, BGH) sees it differently. What matters is not how long the tenant is away or how much floor space they still use, but whether they give up control (Gewahrsam) entirely. If they keep one room to store furniture or to stay overnight occasionally, that is a partial handover — with a claim under § 553 (1) BGB. Both decisions on the point are in the case-law section below; in practice it means: ask what the tenant is keeping before you pick your provision.

Legitimate interest: a lower bar than most landlords assume

§ 553 (1) sentence 1 BGB requires a legitimate interest that arose after the tenancy agreement was concluded. The wording gives no examples, but the courts have drawn the frame widely: a work-related stay abroad qualifies, and — settled at the highest instance since January 2026 — so does the plain wish to reduce one’s own housing costs, entirely regardless of whether the tenant financially depends on that reduction.

Two points still limit it, and both are the useful ones for you:

The three grounds on which you may refuse

§ 553 (1) sentence 2 BGB takes the claim back in three cases. Only these three carry a refusal; anything else is a matter of taste and will cost you the case.

ExceptionWhat you assessWhat you should document
Good cause in the person of the third party It concerns the specific person named, not subtenants in the abstract. That is why the tenant has to name them — you do not owe permission “for whoever turns up”. The name and, where the tenant supplies them, the personal details; plus the concrete facts on which you base a refusal.
Overcrowding Whether the residential space would be overcrowded — the question is the number of occupants relative to the flat, not your sense of comfort. Floor area, number of rooms, and the number of people who would live there.
Other unreasonableness The catch-all: circumstances that make the handover unreasonable for other reasons. As an exception to a statutory claim it is read narrowly — the mere fact of one more person in the flat is not enough. The concrete circumstance, not the conclusion. “Unreasonable” is your assessment, not a fact.

The subletting surcharge is an exception, not a price

Many permission letters routinely include a surcharge. The statute, however, does not treat it as consideration for your consent but as a repair of an otherwise unreasonable outcome: under § 553 (2) BGB the landlord may make permission dependent on the tenant agreeing to an appropriate rent increase only where the handover would otherwise be unreasonable for the landlord. Unreasonableness is the precondition, not the consequence.

Two practical consequences. First, the statute names no percentage and no amount — fixed rates you find online come from lower-court decisions or association guidance, not from the law. Second, the surcharge is not a rent increase under § 558 BGB: it follows its own provision, has nothing to do with the local reference rent and bypasses the capping limit on rent increases. Do not mix the two routes — a surcharge dressed up as a rent increase is vulnerable on form alone.

When someone sublets without permission

The reverse case is the more frequent one: someone you have never met is living in the flat. Legally that is a termination ground of its own. § 543 (2) no. 2 BGB names as good cause that the tenant violates the landlord’s rights to a significant extent by passing the property on to a third party without authorisation.

But do not jump straight to termination without notice. Where the good cause is a breach of a contractual duty, § 543 (3) sentence 1 BGB allows termination only after a reasonable period set for remedial action has expired without result, or after a warning notice has been issued without result. A termination without a prior warning is therefore usually ineffective — and the second attempt only lands months later. The same order applies to ordinary termination: § 573 (2) no. 1 BGB requires a contractual duty breached culpably and to a not insignificant extent, and the notice must state the grounds under § 573 (3) sentence 1 BGB. How tightly the formalities of a termination are drawn is shown by the parallel case of termination for rent arrears.

Assess first, warn second. Before writing a warning notice, ask whether the tenant would have had a claim under § 553 (1) BGB. If so, the breach weighs far less — they could have demanded permission anyway. The cleaner route is then to grant the permission formally after the fact, while making clear that it is personal to the named subtenant and revocable.

The overlooked risk: the tenant may terminate

The quietest cost trap sits in § 540 (1) sentence 2 BGB: if the landlord refuses permission, the tenant may terminate the tenancy on an extraordinary basis observing the statutory notice period, unless there is good cause in the person of the third party. This right exists even where you were entitled to refuse — unless the refusal rests precisely on the person of the third party.

For your calculation that means a refusal may cost you the tenant. An illustration with round numbers:

ItemAmountNote
Net cold rent per month780 €running tenancy, no complaints for years
Rent lost over 3 months of vacancy2,340 €3 × 780 €
Re-letting: listing, viewings, minor repairs900 €estimate, varies widely by property
Total3,240 €the result of a refusal that gained you nothing

On the credit side of an unfounded refusal there is: nothing. Which is why the sober question before any refusal is worth asking — which of the three exceptions actually applies, and can it be backed by facts?

Tax: the surcharge is simply rental income

In tax terms the whole matter is unspectacular, and that is the good news. An agreed subletting surcharge increases your income from letting and leasing under § 21 (1) no. 1 EStG (Einkommensteuergesetz, the German Income Tax Act) and goes into the same line of Anlage V, the rental-income schedule, as the rest of the cold rent. There is no separate field for it.

Nothing else changes: depreciation (AfA) runs on unchanged, because neither the building nor the acquisition cost has moved, and your deductible expenses stay the same. What the subtenant pays your tenant is not an item in your Anlage V — there is no tenancy between you and the subtenant. What your tenant does with that income is their tax matter, not yours.

What the courts have decided

The statute does not say what “part of the residential space” is, nor what counts as a legitimate interest. The Eighth Civil Senate of the Federal Court of Justice (Bundesgerichtshof, BGH) has decided both — and the most recent decision is only months old.

BGH, judgment of 11 June 2014 – VIII ZR 349/13

A multi-year, work-related stay abroad can establish a legitimate interest in handing over part of the residential space. What decides the line against § 540 BGB is control: a partial handover is to be assumed as a rule already where the tenant does not give up control of the space entirely — keeping one room of a larger flat to store furniture or for occasional overnight stays is enough. For you that means: the length of the absence is not a criterion, but the question of the room kept back is.

BGH, judgment of 13 September 2023 – VIII ZR 109/22

The Senate confirmed that line and drew the consequence that looks surprising at first sight: a claim to permission may in principle also exist in the case of a one-room flat. Anyone who assumed that a single room rules out a partial handover by definition should drop that from their reasoning — it will not carry a refusal.

BGH, judgment of 28 January 2026 – VIII ZR 228/23

The most recent and, in practice, the most important decision: the tenant’s wish to reduce their own rent expenditure is a legitimate interest in principle, regardless of whether they are financially dependent on that reduction. The objection “they can clearly afford the flat” is therefore spent. The flip side is in the same headnote and is your strongest argument in the cases that matter: profit-making going beyond covering the tenant’s housing-related expenses is not covered by the claim.

Frequently asked questions

Can I rule out subletting in the tenancy agreement?

Not effectively for residential space, as far as part of the flat is concerned: § 553 (3) BGB declares any agreement to the tenant’s detriment ineffective. For handing over the entire flat under § 540 (1) BGB there is no claim in the first place.

Does the tenant have to name the subtenant?

In practice, yes. Two of the three refusal grounds in § 553 (1) sentence 2 BGB turn on the person of the third party or on the number of occupants — without those details you cannot carry out the statutory assessment at all, and you do not owe permission for an unnamed third party.

May I charge a surcharge for the permission?

Only on the condition set out in § 553 (2) BGB: where the handover would not be reasonable for you without an appropriate rent increase. There is no statutory rate or amount; the surcharge is not a rent increase under § 558 BGB and therefore does not go through that procedure.

My tenant lets the flat on a holiday-rental platform — is that subletting?

A claim under § 553 (1) BGB does not cover it, at least in so far as the tenant is after profit rather than covering their own housing costs (BGH, VIII ZR 228/23). If the handover happens without your permission, § 543 (2) no. 2 BGB is open to you — with a prior warning notice under § 543 (3) BGB. Whether state-level rules against the misuse of residential space also apply depends on the federal state and is not covered here.

Can I withdraw a permission once given?

The permission relates to the specific third party named; it is not granted for anyone else. Whether and under what conditions it can be revoked as against the same subtenant depends on the individual case and on the wording of your declaration — which is why you should phrase it as person-specific and in writing from the outset.

Tenancies, deadlines and receipts per property

RenoDiary brings rental income, correspondence and maintenance together per property — and shows what a change of tenant means for your cash flow and your Anlage V.

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Sources

This article offers general orientation and does not replace individual tax or legal advice within the meaning of § 3 StBerG (Steuerberatungsgesetz, the German Tax Advisory Act). Whether a legitimate interest exists and whether a refusal holds depends on the individual case; the figures in the worked example are illustrations, not empirical values.