Cash-strapped Italy is putting historic properties including castles, barracks and prisons on the market for long-term leases in a bid to drum up funds and bring down public debt, officials said.

The list of hundreds of properties includes a medieval castle in Soriano nel Cimino near Rome, an 18th-century former prison on the island of Procida in the Bay of Naples and three 19th-century barracks on the shores of Lake Garda.

“It is a good idea for us, a way of developing tourism. A hotel here would be great!” said Fabio Menicacci, mayor of Soriano nel Cimino.

The price paid by the current leaseholder, the local town council, for the turreted 13th century castle is €36,000 a year, moat included.

The state property agency said it is offering 50-year leases for residential or commercial use and is shelving plans for a large-scale sale of historic homes because of the sharp drop in prices on the Italian property market.

The agency, which has a portfolio of 46,420 properties worth an estimated €55.6 billion, has selected 350 properties and is drawing up a list of 4,300 more which will be put on the rental market starting from January 2013.

Laws to allow leasing of state properties have been in place for years but only one lease has been granted so far – for Villa Tolomei in Florence which is being turned into a luxury hotel with a lease of €54,000 a year.