(Bloomberg News) Jose Blanco, Spain's development minister, tried to persuade U.K. investors today to purchase unsold vacation homes in a country where more than 50,000 home buyers have lost the legal rights to their properties.

"This is an ideal time to invest in Spanish real estate," Blanco, 49, told reporters after his presentation. "There has been a significant drop in prices, while all the competitive advantages we offer still exist," the minister said. He will deliver the same message to investors in France, Germany, Switzerland, the Netherlands and Russia.

The campaign follows renewed calls from European Parliament members including Marta Andreasen, Roger Helmer and Michael Cashman to freeze some of the funds the European Union gives Spain until it resolves legal shortcomings that have stripped once-legal buyers of ownership rights. A non-binding 2009 report by the parliament's petitions committee criticized the country for applying restrictions on coastal property retroactively and showing "judicial laxity" toward corruption and speculation.

"It's inconceivable that anyone would want to invest in property in a country that has shown itself to be lawless when it comes to property rights," Andreasen, a member of the U.K. Independence Party, said in a telephone interview. "Andalusia has 300,000 illegal homes alone. If we extrapolate that to the rest of Spain, a million homes is a conservative number."

Andalusian Properties

Andalusia, a popular tourist destination in southern Spain, is one of the worst affected areas, according to the committee's report. A spokesman for Andalusia's regional government, who asked not to be cited by name, said an inventory of illegal properties in the region is being compiled. So far, 25,000 have been identified, he said.

Marisa del Valle, a spokeswoman for the public prosecutor responsible for cases involving town planning and the environment, said there's no way of knowing how many homes have been built illegally in Spain. Eva Santiago, a spokeswoman for the Ministry for Transport and Development, said her department doesn't have an estimate.

About 50,000 owners of beachside properties have lost rights to their homes after Spain's coastal law was amended and applied retroactively, according to PNALC, a group representing owners affected by the coastal law. As many as 500,000 could eventually be affected by the law, the organization said.

Maria Jose Cejas, a spokeswoman for the Ministry for the Environment, said that fewer than 2,000 home owners have lost their property rights under the new coastal law.

British Buyers

British nationals account for about 31% of all foreign-owned homes in Spain, the transport and development ministry estimates.

Each of Spain's 8,116 town halls has the authority to make planning decisions and issue building permits with little oversight from the regional or national governments. At the peak of the housing market in 2007, municipal governments collected 40 billion euros ($59 billion) from real estate activities such as building permits and land sales in that year alone, according to Jose Antonio Perez, a professor who teaches about real estate at the Instituto de Practica Empresarial in Malaga.