Exorbitant and unreasonable, says Pahang Bar chairman over ‘office fee’ charge by state Land and Mines Office

KUANTAN: The Pahang Bar has expressed its dissatisfaction over the "office fee" charged by the state Land and Mines Office and district land offices for registration of property dealings.

Calling it an exorbitant and unreasonable increase by the state government, Pahang Bar chairman Muthukumar Suya Kumanan said the move came as a shock as there was neither prior notice nor consultation with the relevant stakeholders in the real property industry, especially lawyers dealing with transfers of properties.

He said although the increase was effective from Dec 1,2020 under the Pahang Land (Amendment) Rules 2020 (2020 Amendment), it was only announced on Jan 4 and took effect immediately on the first day of the working week of 2021.

"This has caused much dissatisfaction amongst many law firms attending to the registration of transfers and their respective clients, especially those who have already paid the stamp duty before the close of 2020 but are unable to register the transfers due to the queue for dates for presentation of registration of transfers under the appointment system, practised since Dec 21 2020 by all the registering land authorities in the state due to the fear of the Covid-19 pandemic.

"Moreover, some who face delays in registering due to the appointment system may be penalised unfairly for delayed registration based on the new rates," said Muthukumar.

He pointed out that prior to Jan 4,2016 the registration fee for transfers of properties valued between RM100,000 to RM250,000 was RM250.

"On Jan 4,2016, the rate was increased to RM400. Today, the rate has been gazetted as '50% of the stamp duty payable.'

"Stamp duty is imposed by the Collector of Stamp Duties on instruments of transfers of titles based on the rate in the Stamp Act 1949 which is on a steep ascending rate as the value of the property increases after RM100,000.

“It is a form of tax paid to the Federal Government and certainly does not justify the value of the 'office fee' as revenue to the state government.

"Pegging the registration fee to rates meant for a federal tax, albeit half, will unfairly create an excessive and unjustified windfall to the state government for what is only charges for services that are 'administrative' in nature," said Muthukumar.

Using a property valued at RM250,000 as an example, Muthukumar said the stamp duty payable was RM4,000 and the registration fee would therefore be RM2,000.

"That is a 500% increase from the post-2016 and pre-2020 rate, which is exorbitant.

"For properties with values that exceed RM1mil - for example RM1.5mil - the registration prior to the 2020 Amendment attracted a fee of RM3,200 only. The increase is even more absurd, stamp duty at RM44,000 and hence registration fee at RM22,000. This is an outlandish 687% increase," he said.

Muthukumar said the 2020 Amendment placed Pahang as the state with the highest registration fee rates for transfers when compared to other states in the peninsula with relatively high registration fees like Kedah and Penang, which were between the range of 0.5% to 0.63% of the value of the property for higher value properties.

He added that it dwarfed metropolitan Kuala Lumpur which only charged a standard rate of RM100, he said.

"Whilst we appreciate the state government's good intentions in bringing working costs in line with inflation, we respectfully request the state government to simultaneously protect the economic interests of the citizens of the state of Pahang.

"Such increase is burdensome to the rakyat during such economically challenging times. It is counterproductive to stimulating the economy of the state that is already severely battered by the effects of the Covid-19 pandemic, especially in the real estate sector that has been, even before the pandemic, sluggish for the past few years and is projected to be worse with such increase in costs," said Muthukumar.

He urged the state government to impose an immediate and indefinite suspension – a moratorium – of the office fee for registration of transfers of title and certificates of sale under the 2020 Amendment and proceed to repeal this aspect of the Amendment.

"In the meantime, our task force on the 2020 Amendment will be engaging with other relevant stakeholders and submit our recommendations to the state government of Pahang for a more reasonable, if not equitable, increase in the registration fees for transfers and certificates of sale, taking into account the present economic situation," he said.

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