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Conveyancing fees hike catches industry unaware

MAIN IMAGE: Tony Clarke, Rebosa CEO; Michele Bovet, Marketing Manager of SA Home Loans

Danie Keet

Property practitioners have been caught unawares with the sudden increase in conveyancing fees that came into effect on 16 May 2022.

The fees have increased by just less than 5% across the board.  For example, for an ordinary transfer or a bond of R2 000 000 the previous fee was R33 212.00 (incl VAT). It is now R35 178. The revised fees became effective on all deeds of sale dated 16 May 2022 or later.

The increase is limited to the  conveyancing fee component of the costs.  Transfer duty, deeds office fees and other related costs will remain unchanged.

According to Michele Bovet, Marketing Manager of SA Home Loans, their company does not have any involvement in the determination of these fees – these being set by the Law Society.

“Their practice is to review these tariff tables annually and apply inflationary increases as they have done again this year. We look to assist the affordability impact for our clients by negotiating discounts of up to 50% off these set tariffs with our attorney partners, which does have a substantial and positive benefit.”

Tony Clarke, Rebosa Chairman, said the increase cannot be implemented in this way.

“I am supportive of attorneys and that the fees should increase but not on the day. No warning nor notice was given. There are thousands of transactions that are being negotiated at this time throughout South Africa and none of those buyers are aware that the costs will be increased by the time they sign an offer.

“We have good cause to make an urgent application to stay the increase, and that could mean indefinitely, until the case is heard. We could also discredit the conveyancing fraternity as these effects the consumer in a very direct way.

“Pre-qualifications have been done on buyers, which in many cases include costs, which, again, could have the effect that in a day, those buyers had an opportunity to purchase a property and now lost that opportunity. This effects the poorest of our consumers.”

Clarke says law firms do not all have automated fee increase schedules and is renowned for poor communication to the property industry, the industry that sells their service, so this is also going to create a very negative image for conveyancers as the updates on the manual rate cards will not be ready and distributed today.

This increase should become effective later to give the property industry some time to be able to, at the very least, implement the increase.

Dave Bennett, Chairman of the Property Law Committee of the Law Society of South Africa (LSSA), said it should be noted that conveyancing fees are not prescribed and that the guidelines are merely a reference or benchmark to guide practitioners.

“Conveyancers are free to deviate from these guidelines, either upwards or downwards, depending on the complexity or simplicity of the matter, or whether a discount has been negotiated by the client, for instance where numerous transfers of similar properties are being attended to simultaneously.

“Annual adjustments are made to the guidelines in line with the average rate of inflation as reflected by the Consumer Price Index (CPIX) for the preceding year (i.e., 2021/22 in this instance) as provided by STATSSA. The actual adjustment for 2022 was around 4,8% across the board, rounded off to the nearest round figure to facilitate ease of use.

“The adjustment was made effective from 16 May 2022, as we try to do so within two months after the annual Deeds Office increase of Office Fees becomes effective, which normally happens on 1 March every year – therefore we try to implement by 1 May every year. We usually endeavour to give around one month’s notice to conveyancers and practitioners, but due to delays in finalising the figures this year, the notice period was less than three weeks,” Bennett explained.

As this is an annual adjustment which has happened in a similar fashion over the last 10 or 15 years and has over the said period been linked to the CPIX. Bennett said they believe that the property industry is aware of these annual adjustments and have come to expect same at this time of year.

“It is therefore not a ‘sudden increase’ but rather a mechanism to ensure that the guidelines are kept up to date regularly and are not allowed to fall behind the CPIX, as this could lead to more drastic adjustments every second or third year. This would obviously have a much greater effect on the property industry.”

As with any increase in Deeds Office Fees, the guideline must become effective from a certain date. It is however up to every conveyancer to decide whether uncompleted transactions will be affected by the new guideline or will be completed as per the original quoted fee.

“As a profession we cannot prescribe to our members how to deal with these pending matters, and we expect that every conveyancer will come to a satisfactory agreement with his/her client in this respect,” he said.

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