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Legal Fee for House Purchase

Posted by Brilliant Property on June 7, 2022

You’ve done your homework and found the ideal location, complete with a variety of amenities (and no strange neighbours).
You’ve mapped out your repayments, savings, and other costs in a detailed budget.

You’ve also chosen the correct bank to supply you with a 90 percent finance margin at a competitive interest rate.

“What could possibly go wrong now?” you wonder. As it turns out, quite a bit!

You uncover some more ‘hidden expenses’ you neglected before you can even take the final step to clinch that wonderful purchase. Apart from the down payment on the property, there’s also the following:

Fees for the Sale and Purchase Arrangement (SPA) as well as the loan agreement.

The commission paid to a real estate agent

Malaysian stamp duty fees

Your carefully planned budget is thrown into disarray when you realise you don’t have enough money to buy your dream home after all. Boooo!

What Am I Supposed To Do If I Don’t Know The Rates?

So, if you want to make sure the scenario above doesn’t apply to you, have a look at the rates we’ve listed for your convenience below.

They’ll tell you what to expect in terms of the extra payments you’ll have to make. Hopefully, you won’t be taken off guard and will be able to acquire sufficient funds in a timely manner. Thank you very much!

If the list above doesn’t deter you, then congratulations; you’re ready to take the most significant financial step you’ll ever take!

What is the difference between a sale and purchase agreement and a lease?

A Sale & Purchase Agreement (SPA) is a legally binding contract between a seller and a buyer that outlines the terms and circumstances of the transaction, as well as the price of the property and any other pertinent information the seller should be aware of.

Because the SPA is a mutual agreement between the two parties, it cannot be further discussed or altered, and cancellation will result in a 10% penalty on the purchase price. Before you sign on the dotted line, make sure you understand everything!

The SPA also contains information on payment methods, defect liability periods, house/unit plans, unoccupied possession, and additional stipulations.

What Is Stamp Duty and How Does It Work?

Stamp duty is a transactional tax or fee that is charged for stamping transactional papers such as loan agreements, lease agreements, and property transfer contracts, including the SPA!

It’s also a legal obligation that must be stamped within 30 days after the SPA’s signature, or you’ll have to pay a penalty of 5% to 20% of the deficient duty.

The sale and purchase agreement, stamp duty, and legal expenses for purchasing a property in Malaysia in 2020 are depicted in this infographic.

Stamp Duty Fees and How to Calculate Them

Memorandum of Transfer (MOT) or Deed of Assignment (DOA) as an instrument of transfer:

Property Values


The first RM100,000 is reserved for you.

1% of total

100,001 – 500,000 ringgit

2 percentage points

500,001 – 1,000,000 ringgit

three percent

More than RM1,000,001

4% of total

For example, if you bought a house worth RM500,000, you’d be in the first two tiers, earning 1% of RM100,000 and 2% of RM400,000.

1% of RM100,000 equals RM1,000

2% of RM400,000 equals RM8,000

RM9,000 in total stamp duty fees

A Sale and Purchase Agreement’s stamp duty is frequently confused with an Instrument of Transfer’s stamp duty. The stamp duty on the SPA is simply RM10 per copy, however the stamp duty on MOT and DOA is computed using a charge structure ranging from 1% to 4%.

Loan agreements are subject to stamp duty as well, but it is capped at 0.5 percent of the loan’s total value.

The loan amount would be RM450,000 if you bought an RM500,000 home with a 90% loan (because 10% of the purchase price will be used as a down payment).

Total stamp duty fees: 0.5 percent x RM450,000 = RM2,250

What Are Legal Fees and How Do They Work?

Legal fees are included in the SPA and are essentially a fee for obtaining legal aid in the purchase of a home. Typically, the seller will appoint the solicitor, but the buyer has the option of choosing their own agent.

Developers may choose to absorb legal bills to alleviate the buyer’s financial concerns.

How Do You Work Out Legal Fees?

Legal expenses are computed as a proportion of the property’s purchase price, which can range from 0.5 percent to 1 percent, depending on the property’s value.

Property Values


The initial investment is RM500,000.

1% of total

500,001 – 1,000,000 ringgit

0.8 percentage

1,000,001 – 3,000,000 ringgit

0.7 percentage point

RM3,001 to RM5,000,000

0.6 percentage

RM5,000,001 and above

0.5 percentage point

The legal fees for a property worth RM600,000 would be:

1% of RM500,000 equals RM5,000

RM800 = 0.8 percent x RM100,000

RM5,800 in total legal fees

Stamp Duty Exemption For Your First Home In Budget 2021

The Malaysian government announced stamp duty concessions for first-time homebuyers on November 6, 2020, at the presentation of Budget 2021!

Both the document of transfer and the financing agreement for the purchase of a first house valued less than RM500,000 would be exempt from stamp duty.

The Sale and Purchase Agreement must be finalised between January 2021 and December 31, 2025 to qualify for this exemption.

That’s right, if your property costs less than RM500,000, you’ll get a complete stamp duty exemption on both the instrument of transfer and the loan agreement!

That’s a maximum savings of RM11,250! The following is the detailed calculation:

Total stamp duty must be paid = stamp duty on document of transfer + stamp duty on loan agreement

[(First RM100,000 x 1%) + (Following RM400,000 x 2%)] + 0.5 percent of the loan amount, assuming a 90% loan-to-value ratio (RM450,000)

= (RM1,000 + RM8,000) + (RM1,000 + RM8,000) + (RM1,000 + RM8,000) (0.5 percent x RM450,000)

RM9,000 + RM2,250 = RM9,000 + RM2,250

Total = RM11,250

In addition, the stamp duty on transfer instruments and credit agreements for buyers of abandoned housing projects and new developers who would take on those projects will be waived. The exemption will also be extended until December 31, 2025.

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