Recent amendments to the Solicitors Remuneration Order 2023 ("SRO 2023"), which came into effect on 15 July 2023, apply to transactions involving non-contentious matters such as the sale and purchase of movable and immovable properties, financing and tenancies. It effectively revokes the Solicitors Remuneration Order 2005 ("SRO 2005").
The increase in legal fees has caused some concern amongst industry stakeholders, however the National House Buyers Association ("HBA") issued a statement on 21 July 2023 stating that the increase of scale fees is in tandem with the times, and while many people are facing challenging times, professionals and lawyers are equally affected. HBA also added that as the increase in legal fees is reasonable and not significant when compared against the property value or loan amount. It is not expected to cause a domino effect towards the rising cost of living or house prices.
It is not all an increase, however, as the SRO 2023 also charges a lower legal fee of between 25% and up to 50% for properties governed under the Housing Development (Control and Licensing) Act 1966 ("HDA"), i.e. bought directly from housing developers.
Below is a comparison table for the changes to the legal fees for sale and transfer (non-HDA):
The comparison of the changes to the legal fees for HDA transactions:
There is technically no hike for HDA transactions however. Fees have been lowered by 50% for properties of which the consideration or adjudicated value is more than RM1,000,000. This will ease the burden of home-buyers, considering the fact that it is not uncommon nowadays for properties to be priced at more than RM1,000,000, especially in high-development urban areas.
The fees for leases and tenancies have also increased. However, with the proposed 'Residential Tenancy Act' in the works, a standard tenancy template may be drawn up, hence the involvement of lawyers may be reduced. Nevertheless, the table below highlights the changes of the legal fees for leases and tenancies:
The fees for financing have also increased. However, for properties under HDA where the loan value is above RM1,000,000, the discount under SRO 2023 (50%) is actually higher than the discount available under SRO 2005 (as amended in 2017) (35%). The table below highlights the changes of the legal fees for financing, discharge of charge and deed of assignment:
Professional Fees for Charges, Debenture and Other Security or Financing Documents
The last revision of the Solicitors Remuneration Order was almost six years ago. The increase can be considered reasonable taking into consideration the higher costs of operations for lawyers. In its press release dated 24 July 2023, the Malaysian Bar stands firmly behind the increase of scale fees chargeable for non-contentious matters under the SRO 2023. They are also of the view that it must ensure that the integrity of lawyers and the ecosystem for lawyers in non-contentious transactional matters are insulated and protected so that the quality of lawyers remains at its highest level and consumers are not short-changed by the professional advice they receive. Likewise, lawyers are prohibited from overcharging, and that is the public interest aspect to the scale fee structure, which acts to protect against overcharging.
Originally Published 22 August 2023
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