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Spain gov't and La Caixa bank sign deal to rent houses

Source: Reuters - Tue 5th Oct 2010

Spanish savings bank La Caixa said on Monday it had signed a deal with the housing ministry to rent out up to 2,400 homes from its property business Servihabitat.

The Spanish government has signed similar deals with other banks such as Santander to rent property in the public agency Sociedad Publica de Alquiler.

The flats will be advertised on the webpage www.spaalquiler.es.

Spain's banks have ended up in the real estate agency business after taking on assets from homeowners, developers and investors who could not meet repayments on debt taken on during the country's decade-long housing boom.

Banks could be turning to rentals in the hopes of selling later when housing prices recover.

According to some estimates, there could be as many as 1 million unsold homes in Spain, constructed in boom times that now pose a serious threat to banks' balance sheets after they bought up large swathes of the market.

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