Advice commissioned by the Local Government Association suggests the government plan for eco-towns may be vulnerable to a legal challenge. Council leaders are calling for a rethink, after advice said the plan would be ‘promoting a policy and process which would be inherently flawed’. The advice added that using policy statements to promote eco-towns is contrary to current planning legislation.

Mortgage advisers are giving customers poor advice according to research by Which? magazine. Which? researchers visited 50 banks, building societies, estate agents and independent advisers and found that 41 of them failed to provide the researchers with all the information required by the Financial Services Authority, while most of them appeared ‘more interested in selling insurance than giving tailored advice.

And the Financial Services Authority has told lenders it has increased measures against mortgage fraud. So far this year 17 mortgage brokers have been implicated in actual or potentially fraudulent applications, and the FSA said it is targeting 200 more firms to ensure they have sufficient checks in place. The FSA said the problem has become widespread in recent years due to ‘easy credit conditions and streamlined application processes’.

The British Bankers Association has released figures for June, showing the number of new mortgages approved by the major banks fell by 23 per cent to a record low, 67 per cent lower than June last year. Just 21,118 loans were approved in June, and the BBA said that the number of homes sold in 2008 is likely to be the lowest since the recession at the start of the 1990s.

But what the banks are losing in market share, they are trying to make up in fees. Charges to take out a mortgage have increased by up to 60 per cent in less that a year, according to research by mortgage adviser mform.co.uk. Comparing the fees on the ‘best buy’ mortgages, some banks and building societies are charging fees of up to £2,500, with the average rising to £938.

Meanwhile auctioneers Essential Information Group has revealed that the number of repossessed properties coming up for sale through auction houses had increased almost 300 per cent in three years, and up 66 per cent in the last year alone. A spokesperson for the group said that repossessions now made up more than one on five of properties offered at auction.

The Housing Corporation has delivered 51,095 affordable homes, which is 3,832 more than the target and 25 per cent more than last year. It adds that over 69,000 more rented homes now meet the decent homes standard, including 25 per cent of all rented homes being three bedrooms or larger, and it has achieved its value commitment with a third more homes built for only 15 per cent more funds. The figures are out in its annual report.

And finally the credit crunch has had its next victim – a housing fair showcasing cutting edge eco-home designs that was going to be held in Scotland next year has been shelved until 2010. Organisers blamed the postponement on the economic climate and shortage of finance.