Berlin's Friedrichshain-Kreuzberg district is one of the German capital's most popular areas to live in these days, with restaurants and bars lining its bustling streets that often lead to the city's most famous sites to visit. Who wonders that an ever increasing number of tourists flock to the district.

Accommodation is just a click away as online portals such as Airbnb are offering multiple choices for both big and small spenders. According to the US online platform for holiday rentals, about 600,000 people booked accommodation in Berlin on its website last year.

Read more: Airbnb dominated by professional landlords

Sebastian Olényi is a resident in Friedrichshain-Kreuzberg. He, too, used to rent out his home to others. "My daughter lives abroad, and I'm frequently travelling for business, which is why it was quite comfortable to offer my apartment as a rental," he told DW.

Zweckentfremdungsverbot bans sub-letting

But two years ago, municipal authorities imposed a new law, called Zweckenenfremdungsverbotsgesetzt, effectively prohibiting so-called home sharers like Sebastian Olényi to offer their apartments for a few days and a bit of money.

Under the law it's still legal to sub-let rooms in one's own flat — but they can take up no more than 50 percent of the floor space. If you want to offer more you need to request permission from the authorities — those however are rather reluctant to grant them. And if you are caught violating the law, punishment is swift, with the fines incurred often in the range of several thousand euros.

Read more: Keeping Berlin affordable

Sebastian Olényi says the law is hitting the wrong people. "I think the law is hugely unfair because it affects everyone. It makes no distinction between those who rent out accommodation for just one day in a year, and those who rent a flat only to sub-let it illegally," he says.

He argues that short-term letting doesn't lead to scarcity on the housing market because rentals for a few days couldn't be rented out longer term.

Lucrative business

Berlin's crackdown on rentals, however, is targeted specifically against owners who offer apartments for more than just a few days. Authorities have reported that illegal letting is taking place in different disguises.

One being that several people join in a scheme where they live together in one of their apartments while renting out the other, or others, to tourists for profit. There have been cases in which not even the actual owner of the apartment knew about this, they say.

Another scheme is based on a law allowing people to register secondary residence, meaning a person can officially live in two different German cities. This includes the right to sub-let a flat for several days under the condition that the tenant lives in both apartments at least temporarily and can prove it. But the authorities have found out that in a growing number of cases this is not true and the secondary residence actually let to tourists.

Moreover, big-time investors are buying up whole rental houses, refurbish them and then rent out all of the apartments to tourists, thus squeezing the housing market further.

The big lament

The situation in Berlin, where housing was affordable for much of the past two decades, is nothing knew to major western German cities such as Hamburg and Munich. They have been grappling with illegal letting for much longer.

In Berlin, a task force of 62 specialists is browsing the internet for suspicious offerings, or — more often — they act on hints from tenants who report about unusual comings and goings in their next door neighborhood. In cases where they are barred from checking on tenants they are even allowed to call the police to gain access to an apartment.

Read more: Berlin 24/7: Real estate war

Currently, Berlin courts are dealing with numerous lawsuits concerning illegal letting. And as always, a legal battle claims casualties on both sides so that more and more home owners have taken to suing the city for being treated unfairly by the authorities.

Nevertheless, since the new law took effect, Berlin has been able to reclaim almost 6,000 apartments for the general housing market, which were illegally rented out as holiday apartments before. 

Improvement ahead?

In the spring of 2018, the Zweckentfremdungsverbotsgesetz will be up for a revision. The amendments currently being discussed in the city parliament include allowing occasional home sharers to let their apartments for a period of 60 to 90 days per year. The figure is roughly equivalent of what Berliners take for holidays or the number of free weekends over a year.

Sebastian Olényi would definitely welcome such a change to the law: "We all understand and share the city's intention. We, too, don't want entire blocs of apartments to be turned into holiday homes. But what we also want is that tenants, who are really living in an apartment and may be away for just a holiday, are allowed to sub-let their home."

Read more: Germany building too few homes, and the wrong kind

With the new regulation, Berlin would follow the example of Hamburg, where it's already in place and has eased tensions between home sharers and the city. The tight situation on Berlin's housing market, however, is unlikely to dissolve any time soon.