The cedar-dwarfed, pale yellow house at 3 Vicente Aleixandre Street in north-west Madrid wasn’t always the damp, silent and neglected place it is now. Nor was it always 3 Vicente Aleixandre Street.

For almost half a century, it was known as Velintonia, the semi-mythical house where the Nobel-prize winning Spanish poet Vicente Aleixandre wrote and received poets and writers including Federico García Lorca, who used to read his works aloud there and play the living room piano.

Today, however, Velintonia is a dilapidated echo of all it once was, and could disappear entirely if someone finds the €4.7m that Aleixandre’s relatives are asking for the property.

Although the Madrid regional government declared the house a “place of heritage interest” at the beginning of June, campaigners who have waged a long battle to save Velintonia and turn it into a museum say the designation offers scant protection.

“We’re not just fighting to save a building or a space; we’re fighting to save the spirit of this house and what it represents,” says Alejandro Sanz, the president of the Association of Friends of Vicente Aleixandre (AAVA).

“If someone buys this house and decides to turn it into a French restaurant or a pub, they’ll be able to – as long as they respect certain things. But the house and its spirit would be destroyed if you did that.”

The AAVA says the heritage interest status – which recognises places or items “without exceptional value, but which possess a special historical or artistic significance” – does not take into account the house’s rich past. In order for it to become a museum, they want to see the property afforded that far more stringent “item of cultural interest” status.

Few buildings in Spain, Europe or the rest of the world have as remarkable a literary pedigree as Velintonia. The nickname was coined by Aleixandre himself as a Hispanicisation of the street’s original name – Calle Wellingtonia – long before it was renamed in the poet’s honour following his 1977 Nobel win.

Aleixandre and his family moved into the house in 1927, a year after it was built. Within months, it became a meeting place for the poet’s friends in the avant garde literary set known as the Generation of ’27, which was named after the year the group met.

In 1928, the poet Luis Cernuda met Aleixandre in the house. Two years later, Lorca – fresh from his travels in New York and Cuba – pitched up on the poet’s doorstep.

“Lorca gives Aleixandre a signed copy of his poems, which reads, ‘In Velintonia at last, Federico’,” says Sanz.

“That shows how important Velintonia had become for the Generation of ’27. It was a symbol: you’ve got Rafael Alberti there, and Manuel Altolaguirre, and Emilio Prados, and others. Salons take place there, and interviews are given there. A lot of Lorca’s works were read aloud for the first time between these walls.”

Lorca was murdered by a rightwing firing squad in the early days of the Spanish civil war, while his fellow poet Miguel Hernández, another Velintonia visitor, died in prison in 1942, his lungs destroyed by tuberculosis.

Unlike some members of the Generation of ’27 – among them Cernuda, Alberti, Prados and Altolaguirre – Aleixandre did not go into exile following Franco’s coup, partly because he was too ill, and partly because he was devoted to his sister Conchita.

After the bomb damage to Velintonia had been repaired and parts of the house rebuilt, Aleixandre and Conchita moved back into the house in 1940 and the poet planted a Lebanese cedar tree in the garden to symbolise a new beginning. The tree still stands today, huge and in need of pruning.

From 1940 until his death in 1984, Aleixandre continued to receive writers from Spain, Latin America and elsewhere. Close friends would be entertained in the garden in the morning or admitted to the room where the poet reclined on a chaise longue from 4.30pm. Less familiar visitors were granted an audience from 7pm.

The Spanish writer and director Vicente Molina Foix was 17 when he was introduced to Aleixandre by a friend. Despite belonging to one of the most revered groups in Spanish literary history, the Aleixandre he befriended was modest, courteous, and deeply interested in the work of younger generations.

“You’d go and visit him and he’d say, ‘Federico was here that afternoon and he sat in the chair you’re sitting in now’,” says Molina Foix, who soon became a Velintonia regular.

“He had inside knowledge of that very important Spanish literary generation and he shared it without any trace of pride or vanity. But it wasn’t just his literary value and importance; I enjoyed myself enormously when I went to his house.”

Sanz and his fellow campaigners want action from the Madrid regional government and the central government to save the house from its gradual decline. Though the structure is fine, the damp is spreading and intruders have made off with Velintonia’s taps and door handles.

“We’re not doing this out of nostalgia, or hero worship or mythomania: we’re doing it because we think that future generations shouldn’t be deprived of such an important creative space,” says Sanz.

“And besides, looking after our heritage is just common sense.”

For Molina Foix, too, the house – and all that it represents – is far too valuable a treasure to lose.

“It’s one of the few houses belonging to a very significant poet that’s still as it was,” he says.

“The house has a symbolic value because generations of writers from many different countries, not just Spain, visited it. This house sits somewhere between the historic and the symbolic. And it has a name that Aleixandre himself gave it: Velintonia.”