Subletting

Subletting / Untervermietung

June 06, 2023

What is subletting?

In the case of subletting, the main tenant lets the rented property in part or in full to other persons.

From a legal point of view, this can be seen as a "transfer of use" of the rented property. The transfer of use to third parties is regulated in section 540 (1) of the German Civil Code (BGB).

Section 540 (1) BGB covers cases of "contractual" transfer of use to third parties. This does not mean that the main tenant concludes a written contract with the subtenant. Nor does it mean that the main tenant transfers the flat in return for payment. A contractual transfer includes cases of subletting in which the subtenant is to acquire a "right of possession" of the flat. The mere revocable granting of usability is not intended to establish the third party's own right of possession and for this reason is considered a mere favour. A distinction between contractual transfer of use and transfer of use as a favour is usually made on the basis of the characteristic of selfishness or disinterestedness. If the flat is to be "possessed" merely altruistically, this is considered a favour, for example if the third party agrees to look after the flat in the absence of the tenant.

Even merely temporary visits, even those of longer duration, are not transfer of use within the meaning of section 540 BGB. In case law, a visit of up to 6 weeks is still considered temporary.

Furthermore, the admission of close family members such as spouses, children and parents of the tenant to the flat does not require permission. However, life partners of the tenant do not belong to the privileged group of persons, so that the permission of the landlord/landlady must be obtained when taking them in. If the tenant lets parts of the flat to a "privileged person", he/she does not have to ask for permission to take them in, but must notify the landlord/landlady, because the landlord/landlady has a right to know who lives in "his/her" flat. Without the notification, the landlord/landlady would not be able to check whether the person admitted belongs to the privileged group of persons.

What is the consequence of a transfer of use to third parties within the meaning of section 540 BGB?

If there is a transfer of use to a third party within the meaning of section 540 BGB, i.e. a sublet, the permission of the landlord/landlady is required.

Such permission to sublet can either be obtained from the tenancy agreement itself or subsequently from the landlord/landlady. If the permission is missing, the "unauthorised subletting" is a reason for termination according to section 543 (2) No. 2 BGB.

Subletting a part of the flat - entitlement to permission?

If only a part of the flat is let to a third party, the tenant may be entitled to permission to sublet according to section 553 BGB. In these cases, the tenant is entitled to permission to sublet if four conditions are met.

First of all, there must be a legitimate interest of the tenant to sublet. The requirements for such legitimate interests were established by the Federal Court of Justice in 1984 (BGH, decision of 03.10.1984 - VIII ARZ 2/84). Accordingly, any interest of the tenant, even a highly personal interest, of not entirely insignificant weight, which is in accordance with the applicable legal and social order, is to be regarded as justified. In this respect, it is irrelevant whether the reasons arise from the tenant's own decision or from external factors. Personal reasons that constitute a legitimate interest in subletting are, for example, the admission of a carergiver into the household or a person to look after children, such as an au pair. Economic reasons that constitute a legitimate interest are any reasons of a financial nature, for example, taking another person into the household to share rental costs.

Furthermore, this legitimate interest must have arisen after the conclusion of the tenancy agreement. The situation of the tenant must be clearly different from the situation of the tenant at the time of the conclusion of the contract, i.e. a claim for permission is excluded if the emergence of the reason was already foreseeable or could have been foreseen by the tenant at the time of the conclusion of the tenancy agreement.

Only part of the flat may be given to a third party for use. The tenant must therefore occupy part of the flat himself/herself. However, he/she does not have to have his/her centre of life in the flat - it is therefore sufficient if the tenant only stays in the flat temporarily. Incidentally, one-room flats can also be "partially" sublet: The wording "part of the living space" in section 553 BGB does not imply that the living space must be spatially separable.

Finally, the subletting must not be unreasonable for the landlord/landlady. Reasons for the possible unreasonableness result from section 553 (1) sentence 2 BGB. Accordingly, these reasons can arise from the person of the subtenant, the living space would be overcrowded, or the landlord/landlady cannot be expected to let the property for other reasons.

There is no such entitlement to the granting of permission in the case of the transfer of the entire flat to third parties.

The landlord/landlady can make the consent to subletting dependent on an increase of the rent. Recently it has been argued that as a rule an amount of about 20 % of the subletting rent is reasonable (LG Berlin v. 7.7.2016 - 18 T 65/16) - however, this legal opinion of the Landgericht Berlin is not undisputed and has not yet been decided by the highest court.

If permission is granted, the landlord/landlady may sublet the flat or parts of it to a third party in a legally permissible manner. A sublease agreement is concluded between the main tenant and the subtenant, from which rights and obligations arise for the main tenant and the subtenant.

Consequence of not granting permission

If permission is not granted, subletting is not permitted. If the tenant sublets without permission of the landlord/landlady, he/she may be threatened with extraordinary termination of the tenancy according to section 543 (2) no. 2 BGB. Accordingly, the landlord/landlady can terminate the tenancy for cause if the tenant leaves the rented property to a third party without permission. Although such extraordinary termination is excluded if the subletting was "merely formally unauthorised", i.e. the tenant had not received permission from the landlord/landlady to sublet, according to the case law of the Federal Court of Justice an ordinary termination due to breach of contract by the tenant is then not necessarily excluded. According to the Federal Supreme Court, the effectiveness of such an ordinary termination depends on the circumstances of the individual case (Federal Supreme Court, judgement of 02.02.2011 - VIII ZR 74/10). Tenants are therefore advised in any case to obtain permission from the landlord/landlady before letting the property and, if necessary, to sue for permission to sublet by means of an action for performance.

The tenant may terminate the lease with three months' notice if permission is not granted.

Practice Tip

Tenants should always have their permission to sublet confirmed in writing so that it is easier to resolve any disagreements later on. Depending on the landlords/landlady’s wishes, the permission can refer to a specific person or to subtenants "in general". If permission to sublet has only been given in respect of a specific person, the tenant needs renewed permission for any "other" subletting.