Thousands of British holiday-home owners are facing potential losses of as much as £150,000 each with the collapse of one of Spain’s largest property developers.

Martinsa-Fadesa, which has sold more than 3,500 flats and houses to British buyers at more than 30 developments in Spain and in Morocco, Portugal and Bulgaria, filed for bankruptcy last week after failing to secure a refinancing package of £3.1 billion.

Britons who put down 30% deposits on homes at Bellarotja, a development of 1,175 properties priced at up to €310,000 (£246,000) near Denia on the Costa Blanca fear the project, already long overdue, may never be completed. This could leave them tens of thousands of pounds out of pocket.

Other buyers who have tried to pull out of purchases at Martinsa-Fadesa’s giant Costa Esuri development of 2,184 homes and two 18-hole golf courses on the Costa de la Luz, close to Spain’s border with Portugal, despair of obtaining a refund after waiting months for their money.

Martinsa-Fadesa is the latest in a series of high-profile Spanish property developers to have collapsed in recent months as the country’s spectacular property bubble bursts.

There have been a string of problems for British buyers pursuing the dream of a holiday home in the sun.

People who have bought property in Valencia have lobbied the European Union to fight a notorious “land grab” law that has led to their homes being expropriated by developers.

In Marbella, meanwhile, the bulldozers have been moving in to demolish homes built with planning permission issued by local authorities that have since been deemed illegal.

The misery has been compounded by a decade of overbuilding which, combined with the credit crunch, has sent the price of some properties on the coast tumbling by as much as 20% over the past year. Since 1998, 4m new homes and flats have been built in Spain – nearly 1m of which are now believed to be empty.

“Martinsa-Fadesa’s problems are a symptom of Spain’s property crisis, with developer sales down 40%-60% this year,” said Mark Stucklin, head of the Spanishpropertyinsight.com website and a Sunday Times columnist in the Home section.

“It has been compounded by the fact that the company borrowed too much and has too much debt.”

Shaun Pollitt, 38, and his wife Catherine, 41, who run their own decorating company in Manchester, are among those at risk. Two years ago they put down more than £140,000 as a 50% deposit on a 32,000 sq ft plot at Costa Esuri to build a 6,500 sq ft holiday home to enjoy with their five children.

“You don’t know where you stand,” said Shaun Pollitt last week. “We’ve had previous experience in the Spanish market and everything was fine until earlier this week, but once the receivers do go in we’ll be the last people to get our money back.”

Others have been trying – so far without success – to extricate themselves. Among them is Trevor Brewer, 49, from Reigate, Surrey, who set up Carnival Investment Properties 3½ years ago to sell properties in Costa Esuri, and put down a 30% deposit on a £172,000 town house for himself.

He was so appalled by the quality of the work during a site visit that he tried to take advantage of a provision in his contract that would return him two-thirds of his deposit. “In January I was promised my money back,” he said. “I am still waiting.”

Those who have managed to move into their new homes now fear the property company will never complete the unfinished building work.

In 2007 Christine Dawson, 55, sold her four-bedroom detached house in Wakefield to take up the “dream” of early retirement with her husband in Costa Esuri.

She said that her €204,000 Martinsa-Fadesa-built home has a front door that does not fit properly, faulty taps, unfinished grouting, broken tiles, flaking paint and a badly installed boiler. Complaints to Martinsa-Fadesa have gone unheeded.

Last week Dawson said that 125 homes in the area had suffered power cuts because the company did not refill their generators with diesel.

“How will the shopping centre get completed and what will happen to the golf course? You’ve just got to hope that the dream that you bought isn’t shattered by Martinsa-Fadesa going into liquidation,” she said.

Separately, several hundred Britons fear they will lose their deposits of tens of thousands of pounds on unfinished homes on the Costa Blanca. Their developer, San Jose Inversiones y Proyectos Urbanisticos, applied to the Spanish courts last month to enter into a voluntary suspension of payments.

A spokesman for Martinsa-Fadesa said there were 350-400 properties which remained unfinished and added: “The company is looking for solutions, under the supervision of legal process, so we can make [uncompleted] deliveries within the specified period.”

Additional reporting: Danny Fortson

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