If you talk to some property professionals in established markets in Europe, you would believe that East European or Middle Eastern countries are those with the least transparency and the most "closed" systems of international property purchase.

But Spain, a supposedly-established housing market that has been actively encouraging international buyers for five decades now, never fails to surprise with its unregulated and seemingly-uncaring property regime.

Let's examine the latest scandals that have plagued Spain.

Three holiday home schemes in Marbella have been excluded from an initiative to stop a decade-long dispute over the legality of developments. The town's new mayor, Angeles Muñoz – who has vowed to end years of actual or alleged corruption involving former Marbella council chiefs and developers – says 18,000 "illegal" homes in the area will receive retrospective building licences, making them legal.

But 20,000 owners on the three excluded schemes are left high and dry. Many can produce documentation they quite reasonably signed to purchase those homes. It appeared legal, authorised by local planners and developers, yet because of town hall corruption at that time, they were later deemed illegal.

"For four years I've been writing to solicitors, councillors and officials in Marbella and Madrid. No one replies. No one puts anything in writing. It's as if everything and everyone is corrupt and no one wants to commit to doing anything," says one British owner who I spoke to last month. Others caught in a similar dilemma include Germans, Russians, Scandinavians and Middle Eastern buyers.

If that scandal was the only one, few could criticise the country's property establishment as a whole. Yet it is simply one of many.

An estimated 1.05 million new homes are completed or nearly built across Spain, but without buyers. About 50 per cent are holiday homes on the Costas. Why did local planners keep giving consent when there was such excess supply?

Some banks are refusing to honour bank guarantees placed in escrow-type deposits by foreign buyers, even after developers have gone bust.

In one area of Andalucia, almost 3,000 homes are scheduled for demolition because they were built illegally on land designated as open space. In Valencia region, "land grab" compulsory purchases of holiday homes still take place.

As a result of over-building and buyers being scared off Spain, values in some coastal areas have halved since the housing market fall began in 2006.

Now there are new problems. In the UK there is a fraud investigation under way at the Royal Bank of Scotland after allegations that two of the institution's international mortgage team are introducing customers to estate agents in Spain – without revealing that the two bank employees get a cut of any commission earned by those agents when they secure a deal.

Even once you buy and move in to a property, the hassles may continue. A recent TV documentary shown in the UK featured an individual who bought a home on the Costa Blanca, but spent his day walking around a building site. The developer had gone bankrupt so the buyer had to dodge exposed high-voltage cables and sweep away sewage that bubbled up outside his home in a part-completed housing estate.

There is no realistic way that the development will improve. Individual owners cannot afford to complete half-finished features; no other developer is able to take it over in a downturn; the old developer, of course, cannot be order to complete the work.

There are plenty of apologists for Spain's governmental failure to tackle corruption in its property market.

Anyone who writes an article critical of the market there, scribbles a blog or even adds a simple comment at the end of an online story, will receive a barrage of comments. They come from those with vested interests – estate agents, developers, mortgage lenders – but sadly they sometimes come from desperate owners who have failed to sell their home over several years.

Those homes' values have plummeted over that time and owners are desperate to present a falsely optimistic view of Spain to encourage buyers to come forward. You can hardly blame them, although the truth will be out come what may.

There is some hope that the growing number of Spanish housing experts, think tanks and environmental groups complaining about rampant over-development and under-regulation are raising their voices.

The good news is that they will stop this happening again in the future. The bad news is that almost nothing can be done to remedy the current mess. For the individual buyers left in the middle, you can only feel sadness.


- The writer is a Property Correspondent for The Observer

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