The law is designed to protect Spain's coastline
Spanish MEPs have joined counterparts in criticising the treatment of expats who face having homes in Spain bulldozed under coastal protection law.
Rules introduced in 1988 left coastal properties liable to demolition and thousands of British and other European owners stripped of property rights.
MEPs say homeowners have been given no legal redress or compensation. They have asked for the law to be clarified.
Spain insists owners of legally built homes are being "fairly compensated".
The law was designed to protect the coast and set limits on building, allowing municipal leisure developments but not private homes.
Since its introduction, thousands of people who live or have holiday homes in Spain have discovered that properties bought legitimately through the Spanish legal system had, in fact, been built in breach of the regulations.
Meanwhile, in Andalucia, regional authorities have applied the law retrospectively to declare legitimately built properties illegal.
Since the law came into force, courts have rejected 96% of owners' appeals against expropriation, the European Parliament's petitions committee was told.
"The Spanish government must recognise that those affected must be fully compensated," said Spanish centre-right MEP Gabriel Mato.
"We are talking about people who have lived in their homes for many years and who lost their property rights without an explanation."
Despite this, the committee heard that "unfair demarcation" had left owners of some large hotels and private developments "untouched".
Mr Mato's colleague Carlos Iturgáiz asked: "How can the demarcation line be applied in a zigzag."
British MEP Michael Cashman told the committee thousands of Britons with property in regions like Andalucia, Valencia and Murcia were affected.
Mr Cashman claimed that dubious application of the law had "taken away confidence in Spain generally" and called for EU funding for Spain to be withheld until the issue was addressed.
Another British MEP, Roger Helmer, said afterwards that he had received dozens of complaints from people in his East Midlands constituency.
"Some have seen their dreams, their homes, and their life savings literally reduced to rubble before their eyes," he said.
More than 15,000 people have petitioned the committee about the issue.
Spain's general director for coast and sea sustainability, Alicia Paz Antolín, said owners who lost rights to legally built properties were being "fairly compensated".
This took the form of being given the right to stay in the property for up to 60 years, she said.
The committee is to write to the Spanish government asking for further clarifications on the application of the law and to the European Commission with a request to clarify the legal basis of the cases.