Second Schedule SRO 2023: Lease and Tenancy Fees in Malaysia

A solicitor prepares a lease for commercial premises with a monthly rent of RM15,000. The Second Schedule says the fee for a lease exceeding RM10,000 monthly rent is “minimum of 30% of monthly rent but not exceeding 50% of monthly rent.”

So the fee is between RM4,500 (30%) and RM7,500 (50%). The solicitor charges RM4,500.

But wait — if the monthly rent were RM10,000 (the threshold), the fee would be 60% of RM10,000 = RM6,000. By choosing the minimum rate on a higher rent, the solicitor is charging less than the fee for a lower rent.

This is the overlapping fee problem in the Second Schedule, and it was one of the scenarios Pn Norhayati Mohamed walked through at the CPD talk. The Bar Council’s position: the 30%–50% range for leases exceeding RM10,000 is fair and reasonable, even if the resulting fee is less than RM6,000.

For the broader SRO 2023 framework, read the overview of all six schedules.

What the Second Schedule Covers

Order 2(b) of SRO 2023: remuneration for lease and tenancy of immovable property shall be in accordance with the Second Schedule.

The critical distinction within the schedule is between a lease and a tenancy — the fee structure differs significantly.

The Fee Tables

Lease

Monthly rent	Scale fee
RM10,000 or less	60% of monthly rent (minimum RM1,000)
Exceeding RM10,000	Minimum 30% of monthly rent, maximum 50% of monthly rent

Tenancy

Monthly rent	Scale fee
RM10,000 or less	30% of monthly rent (minimum RM500)
Exceeding RM10,000	Minimum 15% of monthly rent, maximum 25% of monthly rent

No discount permitted. The Second Schedule is not subject to the 25% discount allowed under Order 5 (which applies only to Table A of the First and Third Schedules). A solicitor who gives any discount on a lease or tenancy fee is in breach of SRO 2023.

The Overlapping Fee Problem

The fee bands create an anomaly at the RM10,000 boundary. Here are three worked examples from the CPD talk:

Lease at RM10,000 monthly rent: Fee = 60% = RM6,000.

Lease at RM11,000 monthly rent: If the solicitor charges 50% (the maximum), the fee is RM5,500 — which is less than the RM6,000 chargeable at RM10,000.

Lease at RM15,000 monthly rent: Fee range is RM4,500 (30%) to RM7,500 (50%). If the solicitor charges at the lower end, the fee is again below the RM6,000 threshold.

The Bar Council’s view: the overlapping is an acknowledged structural feature of the schedule. In the case of a monthly rent exceeding RM10,000, the 30%–50% range is considered fair and reasonable — even if the resulting fee is less than what would be charged at the RM10,000 level. The solicitor has discretion within the band to charge what is appropriate to the complexity and circumstances.

In practice, for rents marginally above RM10,000, most solicitors charge closer to the 50% end of the range to avoid the anomaly.

The Six Rules

Rule 1 — One party only. The solicitor shall only act for one party — either lessor/landlord or lessee/tenant, not both.

Rule 2 — Applicable scale fee. Remuneration shall be in accordance with the applicable scale fee. Straightforward — no deviation outside the prescribed rates.

Rule 3 — Non-rent consideration. Any consideration expressed to be payable other than by rent shall be deemed to be rent for this purpose. This catches arrangements where the tenant pays a lump-sum premium plus a nominal rent — the premium is treated as rent for fee calculation purposes.

Rule 4 — Varying rent. Where a varying rent is payable (e.g., rent reviews, stepped rent, turnover rent) and the amount can be determined at the time of execution, remuneration is based on the highest amount of rent payable. Where the varying rent cannot be determined at execution (e.g., a pure turnover-based rent with no minimum), the fee is governed by Rule 1 of the Sixth Schedule — the seven-factor “fair and reasonable” test.

Rule 5 — 10 or more units (landlord only). Where a solicitor represents a lessor or landlord of 10 or more units in a building, using a standard form lease or agreement, or where the lease/tenancy is renewed on the same terms, the fee is 50% of the applicable scale fee — subject to the minimum fee specified in the schedule.

This rule applies only when acting for the landlord, not the tenant. A tenant’s solicitor in the same building charges the full scale fee.

Worked example from the CPD talk:

• Lease, RM10,000 monthly, 10+ units: Applicable fee is RM6,000 (60%). At 50%, the fee is RM3,000. The minimum of RM1,000 does not apply because RM3,000 exceeds it.
• Lease, RM800 monthly, 10+ units: Applicable fee is RM480 (60%). At 50%, the fee would be RM240 — but the minimum is RM1,000, so the solicitor charges RM1,000.
• Tenancy, RM12,000 monthly, 10+ units: Applicable fee range is RM1,800 (15%) to RM3,000 (25%). If the solicitor charges the maximum of RM3,000, 50% would be RM1,500 — but the minimum of 15% (RM1,800) applies, so the solicitor charges RM1,800.

The interaction between the 50% reduction and the schedule minimums produces non-obvious results. This is the kind of calculation that breaks in Excel when the formula does not account for the minimum floor.

Rule 6 — Immovable property only. The Second Schedule applies only to leases and tenancies of immovable property. Equipment leases and equipment rentals are not covered by this schedule — their fees are governed by Rule 1 of the Sixth Schedule.

This is an important exclusion. A solicitor who charges Second Schedule fees for an equipment lease agreement is applying the wrong schedule.

Practical Implications

The Second Schedule’s fee structure is simpler than the First or Third — there are no Table A/Table B distinctions, no principal/subsidiary instrument complications, and no negotiating fee. But the overlapping bands and the 10-unit rule create enough room for error that manual calculation remains a risk.

For firms handling commercial leasing work — particularly those acting for landlords across multiple properties — the interaction between the 50% rule, the minimum fees, and the lease/tenancy distinction means every quotation involves a multi-step calculation. A conveyancing billing system that handles these rules automatically removes the ambiguity.

The Rules Referenced in This Article

• Solicitors Remuneration Order 2023 — full text (PDF)
• SRO 2023 hub page — Malaysian Bar