Chap sadly back around houses in Spanish city (9)
I believe the answer is:
salamanca
'spanish city' is the definition.
(I've seen this before)
'chap sadly back around houses in' is the wordplay.
'chap' becomes 'man' (I've seen this before).
'sadly' becomes 'alas' (I've seen this before).
'back' says the letters should be written in reverse.
'around houses' becomes 'ca' (I am not sure about this - if you are sure you should believe this answer much more).
'in' indicates putting letters inside.
'alas' written backwards gives 'sala'.
'sala'+'ca'='salaca'
'man' going within 'salaca' is 'SALAMANCA'.
(Other definitions for salamanca that I've seen before include "Spanish city" , "City of western Spain" .)