Britons face losing everything in Spain.

as Spanish construction industry goes into meltdown

Thousands of Britons who have bought homes in the Costas face losing their investments as Spain's real estate and construction industry goes into meltdown.

Those buyers who have made down-payments on properties that they have not yet taken possession of could find themselves losing everything, analysts have said.

The warning came as Spain's largest property developer Martinsa-Fadesa filed for bankruptcy after failing to secure a loan as part of a 4 billion euros refinancing package.

The Spanish government has refused to come to the financial aid of the troubled property group, insisting that the private sector must be responsible for solving its own problems.

The crisis has sent shock waves through an already troubled real estate industry and heightened fears that other property and construction companies could also fail.

"It has sent a message that Spanish developers are in a lot of trouble," explained Madrid based Roger Cooke of Cushman & Wakefield, who said dozens of smaller developers had gone under since the bottom fell out the market last year.

"It is does not come as a surprise to see the big companies following suit."

The impact on British investors in Spain could be huge with those who bought off plan most at risk.

"Hundreds of Brits will be affected by the collapse of Martinsa-Fadesa alone," predicted Mark Stucklin, of Spanish Property Insight, adding that thousands more across Spain could suffer as the market worsens.

"And if a giant like Martinsa-Fadesa can fail, no company is safe and therefore no buyer.

"People who have bought off-plan and even those who have already moved into resorts that may not be entirely finished could find themselves at risk."

An estimated 12,500 properties sold by Martinsa-Fadesa are threatened as the company goes into administration.

British buyers have been particularly attracted to the purpose built luxury golf resorts offered by Martinsa-Fadesa along the Spanish and Portuguese coasts.

New apartments at the British-orientated developments typically sell for between 90,000 and 400,000 euros.

Mr Stucklin advised those who had bought from the company to get legal advice as soon as possible.

"They may well find that they are now creditors and as such will have to get in line to get their money back.

"They will probably find they are somewhere near the back of the line and will have a long wait ahead of them," Mr Stucklin said.

"I'm afraid it's a time of doom and gloom for the Spanish property market," he added.

"People thinking of buying in Spain now have an extra reason to pause."

The Martinsa-Fadesa bankruptcy is the latest in a number of setbacks and scandals to have hit the Spanish Costas property market.

Local corruption and the flaunting of planning laws have allowed swathes of the Spanish coastline to be developed during the last decade.

Earlier this year thousands of expatriates were warned that their homes could be demolished after it emerged the properties they bought in good faith had been built illegally.

Countless others have been duped by unscrupulous estate agents, lawyers or property developers into purchasing homes that have been built on green belt land or without proper permission.

As a result they are now facing huge bills to gain access to services such as electricity and mains water and are unable to sell their homes should they want to return to the UK.