$191 flat-sale fee as lawyers fight for work
Solicitors are charging conveyancing fees of just $191.50 per flat in a Housing Authority project in a cut-throat battle to make money from a dwindling supply of public homes.
The fee compares to $9,000-per-flat charged at the height of the property boom in 1997 and comes just 10 months after the Law Society urged its members not to ask less than $3,500-per-flat for similar projects.
Four law firms have jointly won the contract to do legal work for 982 Home Ownership Scheme flats in Lung Tak Court, Stanley, at the $191.50 rate.
A spokesman for one of the firms said yesterday it would lose money with the bid and could only hope to cover losses by preparing bank mortgages for clients. He said although it had won the bid, it was 'improper' for the authority to shift its legal costs by accepting the lowest price under a tendering system.
Competition between law firms for conveyancing work is expected to intensify following the authority's announcement it will withdraw 12,000 Home Ownership Scheme flats from the market this year. Former Law Society council member Peter Sit Kien-ping said the price had shocked the legal sector. He warned the profession was plunging towards destructive competition, adding that conveyancing fees had tumbled by 98 per cent in three years.
Mr Sit estimated the $191.50 fee would cover only 15 per cent of the cost. 'The market is now out of control where people are only concerned to see if they can get the business, regardless of the price. At the same time, the Housing Authority just lets these things happen,' he said.
Law Society vice-president Ip Shing-hing said the society was concerned about the situation but admitted: 'Nothing can be done in a free market.' An employee at one of the 86 authority-approved legal firms complained: 'Winning a bid with the authority now is not good news for the successful bidder.' But he added: 'Many law firms want to be on the list considering the Housing Authority is Hong Kong's biggest landlord and developer.' Deputy Director of Housing Raymond Bates defended the process, pointing out the prices had been tendered by the law firms involved. 'The firms [in the tender] are all reputable companies. Therefore, we respect the price they tendered,' he said.
A row over legal fees erupted last September when the Law Society wrote to its members telling them not to put in bids of below $3,500 a flat for conveyancing work on the sale of 7,600 Home Ownership Scheme flats. The move was made after conveyancing fees for authority projects plunged by 30 per cent in five months - from $1,250 per flat when the tendering system was introduced in March last year to $897 in July.
The Law Society had suggested low fees could lead to poor conveyancing work on sales contracts, but the Consumer Council stepped in, urging the Law Society to explain its action.