The enactment of the Solicitors' Remuneration Order (SRO) 2023 (P.U. (A) 211/2023), which came into statutory force on 15 July 2023, represents the most significant modernization of conveyancing scale fees in Malaysia since 2005. For purchasers, vendors, and banking institutions, understanding how legal fees are calculated is vital for managing closing costs.
1. Statutory Framework & Background of SRO 2023
In Malaysia, conveyancing practice is governed by the Legal Profession Act 1976. Under Section 113 of the Act, the Solicitors' Costs Committee is empowered to prescribe standardized scales of remuneration. The primary legislative objective is twofold: ensuring equitable remuneration reflecting professional legal liability, while preventing predatory price-undercutting that compromises transaction diligence.
Prior to SRO 2023, the scale of fees had remained largely unchanged for nearly two decades, lagging behind escalating real estate valuations in major urban corridors such as the Klang Valley, Penang, and Johor Bahru. SRO 2023 updated the ad valorem calculation brackets to create a more proportional fee structure.
2. Scale Fee Calculation Structure (First Schedule)
The scale fee for completing a Sales and Purchase Agreement (SPA) or a Transfer of Property is determined based on the property's purchase consideration or market valuation (whichever is higher), calculated according to the stepped brackets below:
| Property Consideration Tier | Statutory Scale Fee Rate | Maximum Fee for Tier |
|---|---|---|
| First RM500,000 | 1.25% (Subject to min. RM500) | RM 6,250 |
| Subsequent RM7,500,000 (RM500,001 to RM8,000,000) | 1.00% | RM 75,000 |
| Excess over RM8,000,000 | Negotiable (Not exceeding 1.00%) | Subject to Agreement |
Itemized Practical Examples
To illustrate how the stepped formula operates in everyday transactions:
- Residential Property at RM400,000:
RM400,000 × 1.25% = RM 5,000 - Subsale Property at RM800,000:
First RM500,000 × 1.25% = RM 6,250
Next RM300,000 × 1.00% = RM 3,000
Total Scale Fee = RM 9,250 - Commercial Property at RM2,000,000:
First RM500,000 × 1.25% = RM 6,250
Next RM1,500,000 × 1.00% = RM 15,000
Total Scale Fee = RM 21,250
3. Permitted Discounts & Mandatory Scale Enforcement
Under Order 6 of SRO 2023, an advocate and solicitor representing a purchaser in a transaction governed by the Housing Development (Control and Licensing) Act 1966 (HDA) or in ordinary subsale transactions may grant a discount not exceeding 25% on the scale fee.
However, any discount granted is strictly at the professional discretion of the solicitor and cannot reduce fees below statutory minimum thresholds. Offering unpermitted rebates or excessive discounts constitutes professional misconduct under the Legal Profession Act 1976 and is strictly monitored by the Bar Council Disciplinary Board.
4. Sales & Purchase Agreement vs. Loan Documentation
A frequent area of confusion for property purchasers is the distinction between the SPA Solicitor and the Bank Loan Solicitor. In Malaysia, even when the same law firm is empanelled by the financing bank, the transfer of property (SPA) and the creation of the loan security (Facilities Agreement & Charge / Assignment) are separate legal transactions requiring separate files, statutory stamping, and professional diligence.
The fee for the loan documentation is calculated under the Second Schedule of SRO 2023 based on the total loan facility amount, following a scale bracket identical to the First Schedule. Thus, a purchaser securing an 80% loan on an RM800,000 property (RM640,000 loan) will pay legal fees for both the purchase and the financing agreement.
5. Essential Title Searches and Statutory Disbursements
In addition to professional legal fees, conveyancing involves out-of-pocket statutory payments known as disbursements. These are mandatory outgoings incurred on behalf of the client:
- Land Registry Title Searches (e-Tanah): Official land searches at the Pejabat Tanah dan Galian (PTG) to confirm the registered proprietor, existing charges, caveats, and restrictions in interest.
- Insolvency / Bankruptcy Searches: Verification via the Malaysian Department of Insolvency (MdI) to verify that neither vendor nor purchaser is an undischarged bankrupt.
- Registration Fees: Statutory fees payable to the State Land Registry for registering the Memorandum of Transfer (Form 14A) and Charge (Form 16A).
- Affidavit & Statutory Declaration Affirmations: Fees payable to Commissioners for Oaths for verification of identities and stamp duty exemptions.
6. Retaining Counsel & Regulatory Compliance
A property acquisition or disposal is frequently one of the largest financial commitments an individual or corporate entity undertakes. Engaging experienced conveyancing counsel ensures that escrow stakeholder funds are protected in designated client accounts governed by the Solicitors' Account Rules 1990, and that all statutory deadlines under the 3+1 month completion schedule are strictly observed.
For official scale calculations, formal fee quotation briefs, or transaction consultations, reach out directly to the practice desk at [email protected].