MyCC: Higher conveyancing fees conflict with govt's bid to improve housing affordability

• The commission said the imposition of fixed conveyancing fees is inconsistent with the fact that litigation fees in Malaysia do not follow fixed rates.
• "Furthermore, MyCC is of the opinion that the action taken by the Bar Council seems to contradict the government's efforts to enhance housing affordability of the citizens."
• "MyCC aspires to create a more flexible fee structure that is in line with international best practices. Additionally, MyCC believes that the consumers are better protected when an industrial policy variation takes into account competition principles."

KUALA LUMPUR (July 17): The recent hike in conveyancing legal fees after the newly enacted Solicitors' Remuneration (Amendment) Order 2023 was gazetted is untimely, amid the rising cost of living, said the Malaysia Competition Commission (MyCC).

"Whilst MyCC acknowledges that, strictly in law, Section 13 of the Competition Act 2010 excludes the amendment Order from the ambit of the Act, nevertheless, with respect, MyCC is of the opinion that the action taken by the Bar Council goes against the spirit of competition," MyCC said in a statement on Monday (July 17).

The commission said the imposition of fixed conveyancing fees is inconsistent with the fact that litigation fees in Malaysia do not follow fixed rates.

"Furthermore, MyCC is of the opinion that the action taken by the Bar Council seems to contradict the government's efforts to enhance housing affordability of the citizens."

"Initiatives like the memorandum of transfer (MOT) and stamp duty exemptions or discounts, real property gains tax (RPGT) exemption, and the Housing Credit Guarantee Scheme (HCGS), whilst they are implemented to specifically spur the housing industry, are also intended to alleviate the impact of rising living costs on the targeted groups.

"MyCC aspires to create a more flexible fee structure that is in line with international best practices. Additionally, MyCC believes that the consumers are better protected when an industrial policy variation takes into account competition principles," it said.

The commission noted that the Bar Council had previously raised its conveyancing fees in 2017, via an amendment to the Order.

The Bar Council nominates four advocates and solicitors to sit on the Solicitors Costs Committee — which is chaired by the Chief Judge of Malaya or a High Court judge nominated by them, and also comprises the Attorney General or a member of the Attorney General's Chambers nominated by them, and the Chief Registrar or a senior assistant registrar nominated by them — which makes or approves amendments to orders that regulate the remuneration of advocates and solicitors.

Under the amended Order, the sale and transfer of properties priced at RM500,000 and below will be subject to a scale fee of 1.25%, with a minimum fee set at RM500.

The subsequent RM7 million will be subject to a 1% fee, while the fees on the amount in excess of RM7.5 million will be negotiable, but should not be more than 1% of the excess.

However, buyers of properties from developers who fall under the Housing Development (Control and Licensing) Act will automatically receive a 50% discount on conveyancing fees.

Previously, the scale fees were set as follows: 1% on the first RM500,000 (with a minimum of RM500), followed by 0.8% on the next RM500,000, 0.7% on the next RM2 million, 0.6% on the next RM2 million, and 0.5% on the next RM2.5 million. Meanwhile, fees on the amount in excess are negotiable but should not exceed 0.5% of the excess.

According to a report by The Star, senior lawyer Datuk Roger Tan, who sits on the Solicitors Costs Committee, said the higher fees were necessary for lawyers to cope with increased costs.

"MyCC has proactively taken positive actions to address the issues of fixed scale fees by professional bodies since 2013. Through the Market Review on Fixing Prices/Fees by Professional Bodies carried out under Section 11 of the Competition Act 2010 back in 2013, MyCC successfully directed or influenced more than five professional bodies to dismantle their fixed professional fees when it was found that they were not empowered by law to do so.

"However, the same market review also recognises that there are professional bodies that are allowed to fix their scale fees in line with the powers conferred on them by their governing legislations.

"Notwithstanding the above, MyCC, since 2015, has consistently been engaging with professional bodies and has decided to focus on the Bar Council with the aim of establishing a precedent, whereby if the Bar Council agrees to dismantle its fixed conveyancing fees, other professional bodies would also adopt a similar approach," it said.

The commission said its approach mirrors the practices of developed nations such as the UK, Singapore, and Australia, where professional bodies including their Bar Councils have stopped fixing fees.

"MyCC was further encouraged by the fact that fixed conveyancing fees were discussed at length by the Special Task Force to Facilitate Business (Pemudah) in their previous meetings."

The commission's chairman Datuk Seri Mohd Hishamudin Yunus urged the Bar Council to reconsider, or at least delay, the implementation of the higher fees and continue discussions with MyCC.

"The Bar Council has the irrefutable potential to set a positive example by promoting competition within the market.

"MyCC has received visits from various professional bodies and traders’ associations that have sought our support for their proposals to fix fees or prices for their products and services.

"However, such an approach does not bode well with MyCC's vision. These bodies should strive for creativity and innovation to promote market efficiency, rather than relying on fixed scale fees. We should stay away from such an approach if we aim to become a developed nation with a strong and robust economy that rests on a dynamic marketplace that encourages innovation, efficiency, and competitive pricing practices,” he said.