SRAO 2017 and Changes to Property-Related Legal Fees
The Malaysian Bar Council in November 2012 approved the amendments to the Solicitors’ Remuneration Order 2005 (“SRO 2005”) that have been gazetted as the SRAO 2017. The amendments were made to adjust the scale fees upwards for several chargeable items in respect of professional fees for the preparation of non-contentious documents. The amendments, effective March 15, 2017onwards, among others brought several important changes to the SRO 2005 which sets out the fees payable to lawyers in property transactions. The changes include those relating to the sale & purchase of property, including subsales and developer transactions, leases and tenancies and all charges, debentures and financing and security documents.
Under amendments to Paragraph 6 of the SRO 2005, lawyers were prohibited from giving discounts on the stipulated scale fees. The SRO 2005 stated: “There shall be no discount on fees specified in this Order.”. This was replaced in the SRAO 2017, allowing lawyers to now give discounts on certain property matters. The new Paragraph 6 reads:
(1) A solicitor may give a discount of up to 25% on fees specified in the First and Third Schedules, except for any transaction governed by the Housing Development (Control and Licensing) Act 1966 [Act 118] or any subsidiary legislation made under that Act.
(2) No discount may be given on fees specified in the Second, Fourth, Fifth and Sixth Schedules.”
The First Schedule specifies the fees for sales and transfers, while the Third Schedule specifies the fees for charges, debentures, and other security or financing documents. The SRAO also increases the fees in these schedules, in a move that is seen as long overdue.
The SRAO 2017 also introduced increased fees for sales and transfers – replacing the previous First Schedule with the following:
| Amount Secured or Financed |
Scale of Fees |
| For the first RM500,000 |
1% |
| Next RM500,000 |
0.8% |
| Next RM2 million |
0.7% |
| Next RM2 million |
0.6% |
| Next RM2.5 million |
0.5% |
Where the adjudicated amount exceeds RM7.5 million, the excess can be negotiated. As an example, under the old SRO 2005 scale, the fees chargeable for the S&P of a RM1.5 million property would be RM10,450.00, while the fees under the new SRAO 2017 scale would be RM12,500.00. Under the SRO 2005, the fees chargeable for transactions governed by the Housing Development (Control and Licensing) Act 1966 (essentially, the purchase of property from developers) were at a lower rate of about 65 – 75% of the full scale fees, depending on the purchase consideration.
The SRAO 2017 also replaced the previous Third Schedule of the SRO 2005 by introducing a new fees scale for charges, debentures, and other security or financing documents. The SRAO 2017 maintained the reduced percentage for fees chargeable for transactions governed by the Housing Development (Control and Licensing) Act 1966 with some changes made to the purchase consideration and loan thresholds.
