Supplementing one's income by renting out a spare room is hardly a novel concept, but the Netherlands took it a big step further today when, in an European first, it officially leased a prison to Belgium.

With plenty of prison cells to spare, the Netherlands has agreed to admit 500 Belgian inmates into its prison in the southern Dutch city of Tilburg. Belgium will pay the Dutch 30 million euros a year for the favour under a three-year deal.

Spearheaded last year by former Belgian prime minister Herman van Rompuy -- who is now President of the European Council -- the initiative should provide relief to Belgium's overcrowded prisons until new ones come into operation from 2012.

Dutch Deputy Justice Minister Nebahat Albayrak delivered the keys of the prison to Belgian Justice Minister Stefaan De Clerck, handing over a hand-sized symbolic key tied to ribbons in the colour of the Dutch and Belgian flags in a ceremony also attended by Dutch Justice Minister Ernst Hirsch Ballin.

"We are not making a profit here," Albayrak said. "Construction of many prisons over a short period combined with lower criminality rates meant that we had overcapacity."

The prison, located in Tilburg's outer city districts and surrounded by an electric, barbed-wire fence, will be staffed by both Dutch and Belgian employees, while the director, Frank Schoeters, is also Belgian.

The transfer of inmates to Tilburg will take place throughout February, with detainees at risk of flight or a social risk that is not in line with the prison's security level excluded from the deal, the Dutch authorities said.

The overcrowded conditions in many of Belgium's 32 prisons, 20 of which date back to the 19th century, can often provide a sharp contrast to the Dutch prisons.

Belgium caters for 10,400 prisoners by having only 8,400 places, a far cry from the overcapacity of 2,000 places that the Netherlands has.

Matching demand with supply can be challenging for many governments when it comes to prison infrastructure. The United States, home to the world's largest prison population, turns to the private sector to accommodate some of its inmates.

The Dutch prisoners at Tilburg have already been transferred to other prisons in the Netherlands. The deal with Belgium can be extended or reduced by one year, based on the needs of the two sides.

"What I understand is that most people that are selected to be placed in Tilburg are quite happy and I also hear some are disappointed when they are not selected," Albayrak said.