Illegal Subletting in Germany

A Comprehensive Guide for Landlords and Tenants

Illegal subletting is a significant issue in the German housing market, often leading to disputes between landlords and tenants. This practice creates legal, financial, and reputational problems for all parties involved, especially when visa holders are implicated.

In this article, we explore the consequences of illegal subletting for tenants, subtenants, and landlords, detailing the legal recourse available and the broader implications of such actions.

What Is Illegal Subletting in Germany?

Subletting refers to a tenant renting out their rented property—or part of it—to a third party. In Germany, subletting is legal only with the landlord’s explicit permission. Illegal subletting occurs when:

• A tenant sublets the property without obtaining the landlord’s consent.
• The subletting arrangement violates the terms of the rental agreement.
• The subtenant resides in the property without the landlord’s knowledge.

Illegal subletting also includes temporary arrangements, such as offering the property on short-term rental platforms like Airbnb, without the landlord’s approval.

Why Do People Sublet Apartments Illegally in Germany?

Illegal subletting typically occurs for financial gain or convenience. Common scenarios include:

1. Profit from Rent Differentials: The tenant charges the subtenant more than they pay the landlord, pocketing the difference.
2. Circumventing Housing Rules: A tenant sublets their property temporarily while traveling or living elsewhere without informing the landlord.
3. Roommate Arrangements: Tenants allow others to move in without formalizing the arrangement.
4. Avoiding Vacant Rental Costs: Tenants sublet their apartments while away on extended vacations or work assignments to avoid paying rent themselves.

While these motivations might seem practical, they are unlawful and can have far-reaching consequences.

What Happens if a Tenant Sublets Without Permission?

Tenants who sublet illegally can face severe legal consequences under German tenancy law, as landlords are protected against unauthorized use of their property. Here’s what landlords can do:

1. Lease Termination for Illegal Subletting

Under Section 543 of the German Civil Code (BGB), landlords have the right to terminate a lease without notice if the tenant engages in illegal subletting. However, the termination process must follow these steps:

• Written Warning: The landlord must first issue a formal warning, demanding the illegal subletting stop immediately.
• Termination Notice: If the tenant refuses to comply, the landlord can terminate the lease, either with notice or, in severe cases, without notice.

2. Landlords Can Sue for Financial Compensation

Landlords can demand:

• Payment of Unjust Enrichment: Under Section 812 BGB, the landlord can claim any profit the tenant earned from subletting. For example, if the tenant charged €1,500 for a room while paying €1,000 in rent, the landlord can demand the €500 difference.
• Damages: If the illegal subletting causes damage to the property or leads to increased wear and tear, the tenant may be held liable for repair costs.

3. Reporting Tenants to SCHUFA for Unpaid Rent

Landlords can report unpaid rent or damages resulting from illegal subletting to SCHUFA, Germany’s credit agency. A negative SCHUFA record can harm the tenant’s ability to secure future housing or credit.

4. Can a Tenant Face Criminal Charges for Subletting?

Yes, in some cases, illegal subletting may involve criminal actions, such as:

• Fraud: If the tenant provides false information or forges documents to facilitate subletting, they may face fraud charges under Section 263 of the German Criminal Code (StGB).
• Tax Evasion: If the tenant earns income from subletting without declaring it, they may be liable for tax evasion penalties.

What Are the Risks for Subtenants in Illegal Sublets?

Subtenants living in a property without the landlord’s permission are not exempt from legal accountability. They, too, can face significant consequences:

1. Eviction of Subtenants Without Rights

Illegal subtenants have no legal right to remain in the property. Landlords can initiate eviction proceedings (Räumungsklage) against them. The eviction process typically involves:

• Court Orders: If the subtenant refuses to leave, the landlord can seek a court order for their removal.
• Bailiff Intervention: A court-appointed bailiff can enforce the eviction, ensuring the subtenant vacates the premises.

2. Subtenants May Be Sued for Property Damage

If the subtenant causes damage to the property, they may be held personally liable. The landlord can sue the subtenant for repair costs.

3. Trespassing Charges for Illegal Subtenants

Under Section 123 StGB, unauthorized occupation of a property can be classified as trespassing (Hausfriedensbruch). Subtenants may face criminal charges, especially if they refuse to leave after being notified.

4. Subtenants May Lose Deposits and Prepaid Rent

Subtenants might lose any prepaid rent or deposits and may still be liable for utility or damage costs if evicted.

How Illegal Subletting Impacts Visa Holders in Germany

For individuals living in Germany on a visa—whether for study, work, or family reasons—illegal subletting carries heightened risks:

1. Visa Renewal Problems Due to Illegal Subletting

Engaging in illegal activities, including unauthorized subletting, can jeopardize visa renewals or lead to revocation. Authorities may interpret such actions as non-compliance with German laws.

2. Criminal Records Can Lead to Deportation

Visa holders with criminal charges, such as trespassing or fraud, may face deportation. A criminal record can also hinder future applications for residency or citizenship.

3. Issues with Anmeldung (Address Registration)

Subtenants in illegal sublets often cannot register their address (Anmeldung) properly, which is mandatory for legal residency in Germany. Lack of registration can lead to fines and visa complications.

4. Financial Burden for Visa Holders

If evicted, subtenants might lose prepaid rent or deposits and still be liable for utility or damage costs.

How to Prevent Illegal Subletting as a Landlord

Landlords can proactively safeguard against illegal subletting by taking these measures:

1. Use a Detailed Rental Agreement

Include explicit clauses stating subletting is prohibited without written permission and that violations will lead to immediate termination.

2. Conduct Regular Property Inspections

Regularly visit the property to ensure compliance with the rental agreement.

3. Screen Tenants Thoroughly

Vet tenants thoroughly before signing a lease. Verify their financial stability and background.

4. Monitor Utility Usage for Unusual Patterns

Unusual patterns in utility bills could indicate additional occupants.

What Are Tenants Legally Allowed to Do When Subletting?

Tenants have specific obligations under German law:

1. Obtain Written Permission from the Landlord: Tenants must always seek explicit approval before subletting.
2. Register Subtenants with Authorities: Provide subtenants with documentation for Anmeldung if subletting is approved.
3. Avoid Profiting from Subletting: Overcharging subtenants is a breach of both tenancy and tax laws.

Why Illegal Subletting Is a Growing Problem in Germany

Illegal subletting contributes to:

• Housing Shortages: Unauthorized sublets reduce the availability of affordable housing.
• Price Hikes: Tenants profiting from sublets drive up rental prices, making it harder for others to find reasonable accommodations.
• Increased Risks for Landlords: Landlords face higher wear and tear, legal disputes, and difficulty managing their properties.

Why Subtenants Should Always Ask for the Rental Contract Before Moving In

When subtenants agree to move into a rental property, they often rely on the main tenant’s word that the arrangement is legitimate. However, this can lead to significant legal and financial problems if the sublet is not authorized by the landlord. To avoid these pitfalls, subtenants should always ask to see the original rental contract or written landlord approval before committing to the arrangement.

Renting a Sublet in Germany

The Risks of Not Verifying the Rental Contract

Subtenants who move into a property without verifying the main tenant’s authority to sublet expose themselves to several risks:

1. Immediate Eviction

If the landlord discovers the subletting arrangement is unauthorized, the subtenant can be evicted with little to no notice. Subtenants in illegal arrangements lack tenancy rights under German law and are treated as unauthorized occupants.

2. Financial Loss

• Lost Rent and Deposits: Subtenants may lose any rent paid in advance or their deposit if the landlord terminates the arrangement.
• Utility Charges: Subtenants may still be held responsible for utility bills incurred during their stay, even if the subletting was illegal.

3. Problems with Address Registration (Anmeldung)

Without proof that the main tenant has the landlord’s permission to sublet, subtenants often cannot register their address (Anmeldung) at the property. This can lead to fines, visa issues for non-EU nationals, and difficulties accessing essential services like banking and health insurance.

4. Legal Troubles

If the landlord decides to pursue legal action against the main tenant for illegal subletting, the subtenant may be dragged into the dispute as a witness or even as a co-defendant if they knowingly participated in the illegal arrangement.

How to Protect Yourself as a Subtenant

To avoid these issues, subtenants should take the following precautions:

1. Request a Copy of the Rental Contract

Ask the main tenant for a copy of the original rental agreement. This ensures:

• The main tenant is legally entitled to sublet the property.
• There are no clauses in the lease prohibiting subletting without landlord approval.

2. Ask for Written Permission from the Landlord

Even if the main tenant shows you their rental contract, ask for written proof that the landlord has approved the subletting arrangement. This could be:

• A signed letter from the landlord.
• An addendum to the original rental contract specifying the terms of the sublet.

3. Verify the Main Tenant’s Identity

Ensure the person subletting to you is the legitimate tenant of the property. Compare their name on the rental contract with their ID to confirm their authority.

4. Insist on a Formal Sublease Agreement

Create a formal sublease agreement that includes:

• Details of the rental period, payment terms, and deposit.
• A statement confirming the landlord’s permission for the sublet.
• Signatures of all parties involved.

5. Avoid Cash Payments

Always pay rent and deposits through traceable methods like bank transfers to create a record of your transactions. Avoid paying large sums upfront without verification of the sublet’s legitimacy.

Red Flags to Watch Out For

Subtenants should be cautious if:

• The main tenant refuses to show the rental contract or provide landlord approval.
• The rent being charged is suspiciously high compared to the market rate.
• The main tenant insists on cash-only payments.
• The main tenant avoids signing a formal agreement or giving you a receipt for payments.

Legal Protections for Subtenants in Authorized Sublets

When a sublet is properly authorized:

• Subtenants gain some tenancy rights, such as protection from arbitrary eviction.
• They can register their address at the property without issues.
• They are entitled to seek legal recourse if the main tenant breaches the sublease agreement.

What Landlords Can Do if a Tenant Sublets Without Permission

If a landlord discovers unauthorized subletting in their property, they can take a series of strong legal actions to protect their rights and address the breach. German tenancy law provides landlords with clear remedies to deal with tenants and subtenants involved in illegal subletting. Below is a detailed, step-by-step guide for landlords.

1. Issue a Formal Warning (Abmahnung)

While issuing an Abmahnung (formal warning) is often the first step, it is not always required under German law. An Abmahnung gives the tenant an opportunity to stop the unauthorized subletting and comply with the lease agreement. However, if the violation is severe, such as deliberate concealment or profiteering, landlords may proceed directly to termination of the lease without issuing a warning.

When to Issue a Warning:

• Recommended: In most cases, particularly for minor or first-time violations, landlords should issue an Abmahnung to show they attempted to resolve the matter amicably.
• Optional: If the tenant’s actions are so severe that continuing the lease is unreasonable (e.g., deliberate profiteering or damage to the property), landlords can proceed directly to termination.

How to Issue a Warning:

• Draft a written notice (Abmahnung) detailing:
  • The specific clause of the lease agreement that prohibits subletting.
  • Evidence of the unauthorized subletting (e.g., photos, written statements, or advertisements).
  • A deadline (typically 14 days) for the tenant to stop subletting and for the unauthorized subtenant to vacate the property.
• Send the notice via registered mail (Einschreiben mit Rückschein) to ensure proof of delivery.

By issuing a formal warning, landlords build a stronger legal case if the tenant refuses to comply and the matter escalates to court.

2. Terminate the Lease (Kündigung des Mietvertrags)

If the tenant fails to comply with the warning (if issued) or if the subletting is severe, the landlord has the right to terminate the lease. Termination can be done with notice or without notice, depending on the severity of the breach.

When to Terminate the Lease:

• With Notice: If the subletting violation is not severe but remains unresolved after an Abmahnung.
• Without Notice: If the tenant’s actions make it unreasonable to continue the lease, such as deliberate profiteering or causing damage to the property.

How to Terminate the Lease:

• For termination with notice:
  • Provide at least 3 months’ notice, as required by German tenancy law.
  • Ensure the termination letter includes:
    • A description of the violation.
    • Reference to the formal warning (if issued).
    • A clear statement of the lease termination date.
  • Send the letter via registered mail.
• For termination without notice:
  • Document the severity of the violation (e.g., evidence of financial gain from subletting or deliberate deception).
  • Consult a lawyer to ensure compliance with legal standards for immediate termination.

3. File an Eviction Lawsuit (Räumungsklage)

If the tenant or unauthorized subtenant refuses to vacate after the lease is terminated, landlords can initiate legal proceedings for eviction.

When to File for Eviction:

• After the termination period expires and the tenant or subtenant continues to occupy the property.
• If the unauthorized subtenant refuses to leave voluntarily.

How to File for Eviction:

• File a Räumungsklage with the local district court (Amtsgericht).
• Provide evidence, such as:
  • The lease agreement.
  • Proof of the unauthorized subletting.
  • Copies of the formal warning (if issued) and termination notice.
• The court will review the case and, if justified, issue an eviction order.
• Engage a bailiff (Gerichtsvollzieher) to enforce the eviction order and remove the unauthorized occupants.

4. Sue for Financial Compensation (Unjust Enrichment)

Under Section 812 BGB, landlords can sue the tenant for any financial gain made through unauthorized subletting. This includes:

• The difference between the rent the tenant paid and the rent the subtenant was charged.
• Additional costs incurred due to damages or increased wear and tear caused by the subtenant.

When to Pursue Financial Compensation:

• If you can prove the tenant profited from subletting without your consent.
• If the tenant refuses to pay outstanding rent or compensation for damages.

How to Pursue Financial Compensation:

• Send a formal demand letter (Mahnung) requesting payment of the owed amount.
• If the tenant fails to pay, file a civil lawsuit at the local district court. Include:
  • Evidence of the financial gain (e.g., sublease agreements, bank transfers from the subtenant).
  • Documentation of any damages caused by the subtenant.

5. Report to SCHUFA and Tax Authorities

If the tenant refuses to pay outstanding rent or compensation, landlords can report them to relevant authorities.

How to Report to SCHUFA:

• Confirm the unpaid rent or damages are undisputed or legally validated (e.g., through a court judgment or unpaid invoices).
• Submit the tenant’s information and the outstanding debt to SCHUFA, ensuring you comply with GDPR regulations.

How to Report to Tax Authorities:

• If the tenant earned undeclared income from subletting, file a report with the Finanzamt (tax office).
• Include evidence such as rental ads, payment receipts, or bank transfers between the tenant and subtenant.
• The Finanzamt may investigate for tax evasion, which can lead to fines and criminal penalties for the tenant.

6. File a Criminal Complaint for Trespassing (Hausfriedensbruch)

If the unauthorized subtenant remains in the property after the termination of the lease or eviction proceedings, the landlord can escalate the matter by filing a criminal complaint.

When to File a Criminal Complaint:

• If the subtenant refuses to vacate the property after being formally notified.
• If the subtenant’s presence is disruptive or damaging to the property.

How to File a Criminal Complaint:

• Visit the local police station or file the complaint online, depending on your jurisdiction.
• Provide evidence of trespassing, such as:
  • The termination notice.
  • Proof that the subtenant is occupying the property without permission.
  • Witness statements or photographs.
• The police will investigate, and if trespassing is confirmed, the subtenant may face fines or criminal charges under Section 123 StGB.

Illegal subletting in Germany is a serious issue with far-reaching consequences for tenants, subtenants, and landlords. For tenants, breaching the lease can lead to eviction, financial penalties, and even criminal charges. Subtenants in illegal arrangements are often left unprotected, risking eviction and financial loss. For visa holders, illegal subletting can jeopardize their residency status, leading to deportation or visa complications.

Landlords, on the other hand, have robust legal tools to address unauthorized subletting, from terminating leases and filing eviction lawsuits to reporting violations to authorities. Preventative measures, such as clear agreements and regular inspections, can reduce the likelihood of such issues.

By understanding the legal framework and following proper procedures, all parties can protect themselves from costly disputes and legal complications.