In the grimy south London borough of Lambeth, nestled behind a traffic-clogged road but not far from the river or the political hub of Westminster, is a Georgian square where elegant houses surround a central green. This urban idyll is the location for Patrick McGrath’s latest historical thriller, this time set in the 1970s.

Francis McNulty, ageing poet and veteran of the Spanish civil war, is menaced by repeated apparitions of General Franco, whose phantom invades the domestic space of this magnificently unreliable narrator from his faraway deathbed in Madrid.

It’s an atmospheric novel, combining family comedy with harrowing themes of death and betrayal — a mix encapsulated by the spectral presence of the fascist leader, “a decaying thing of darkness” manifesting among the hydrangeas in McNulty’s beloved garden and giving them the blight.

Franco reeks — of moral turpitude, physical disintegration and Ducados cigarettes — and part of McGrath’s skill is in drawing the sceptical reader into McNulty’s sensory experience. Increasingly dismayed, he finds scraps of smelly military serge among the plants as proof of the old ghoul’s noxious presence. Later the “malodorous memories” include the cordite of a firing squad and filth of a wartime jail. Even the scents of the garden — night stocks and jasmine — help build a picture of a psyche overwhelmed.

The Anglo-Spanish concoction is a flawless mix. True, the main setting is very British, with a walk-on part for an emotionally cool civil servant and boozy wool-gathering in the saloon bar of the local pub. The generalissimo is first glimpsed from the top deck of a bus “shuffling off down Horseferry Road.” But the denouement occurs during a madcap family trip to Madrid. Even in the London house, there are shades of Lorca: three women are locked in this domestic melodrama, battling this cantankerous paterfamilias and his rapid psychological decline.

In the often-mannered first person prose, which is replete with panicky ejaculations, this book enjoys playing with the conventions of the ghost story, of tales of sensation and the supernatural. Take this, as the old man broods on his wartime experiences: “my guilt is a mordant canker which has gnawed at my innards for more years than I can remember.” There are chill fingers to the heart at the slightest provocation. A silent family retainer with sixth sense looks on with a baleful eye, and I was reminded of Sheridan Le Fanu’s short story “Green Tea”, in which a demonic presence hounds a bookish clergyman into madness.

McGrath is a connoisseur of this literary tradition, having edited an anthology of new Gothic tales. He is also author of an introduction to The Monk, Matthew Lewis’ 1796 horror novel, which scandalised England during the very period when Cleaver Square was built.

It’s common these days to describe quite ordinary realist fiction as having “dark” themes, but in the long list of gruesome storytelling from McGrath’s pen, they are pitch black. Previous novels have explored psychotic violence, trauma and physical disfigurement. This attraction to the macabre offers superb motifs to bring alive the question at the heart of this latest novel: in the most extreme of circumstances, and faced with sadistic fascists, McNulty’s courage failed but would I, the reader, have done any better?

In the Prado, just before McNulty’s final confrontation with his past, he contemplates Goya’s late paintings as encapsulating “the mood of the civil war”: “crowds of helpless grotesques in nocturnal settings of wildness and gloom . . . in a country where the light is always failing.”

And for all the brilliant comic touches, Catholicism weighs heavily on this novel, injecting it with the torment of a soul unshriven: McNulty muses on his need for absolution as he recounts his Spanish adventures to a young journalist come to flirt and cajole a story out of him. The mix of humour and moral danger is reminiscent of the London novels of Muriel Spark, which also thread morbidity through the humdrum and ridiculous. It is almost as if A Far Cry From Kensington, Spark’s masterpiece about a small 1950s publishing house, is haunting McGrath’s own imagination as he creates his Kennington tale. There is even a starring role for urine in the central joke of both books.

Last Days in Cleaver Square is as engaging as The Wardrobe Mistress, McGrath’s previous novel, but more tightly written and with playful contrasts of light and dark. It is a more interior work, which is partly achieved through the confessional narrating voice of McNulty, a blizzard of “dear boys” and chummily truncated syntax. Once enjoying the Byronic self-image of the literary freedom fighter, his story threatens to end in bathos. McNulty fears he will die “mad, bad, haunted and alone,” until he achieves redemption and revenge through a final deed of desecrating mischief at Franco’s grave.

As McGrath once explained, in an interview about a previous novel, “the conflict in fiction is often between a character’s better nature and his libidinal nature”. Happily for us, this can be both frightening and funny.

Last Days in Cleaver Square, by Patrick McGrath, Hutchinson, RRP£16.99, 240 pages

Miranda Green is the FT’s deputy opinion editor

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