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What is PLS (Private Lease Scheme) ?

  • Writer: Marcus Liew
    Marcus Liew
  • Jan 8
  • 3 min read

Updated: Jan 11

Private Lease Scheme (PLS) is a relatively new property ownership model introduced primarily by developers. Unlike traditional freehold or leasehold ownership, PLS provides buyers with a 99-year usage right rather than full ownership of the property. The developer retains ownership of the land and property, while the buyer is considered a long-term tenant. While this scheme is legal in Malaysia, it comes with significant limitations compared to conventional ownership.

Key Differences Between PLS and Other Property Ownership Types


1. Ownership Rights

  • Freehold : Buyers own the property and land outright without time restrictions. This is the most desirable type of ownership, especially for investors, due to its flexibility and long-term value.

  • Leasehold : Buyers own the property but only have rights to the land for a specified period (usually 99 years). Ownership can be extended upon payment or returned to the government or landowner after the term expires.

  • PLS : Buyers receive usage rights only, while the developer retains ownership of the property and land. Buyers cannot obtain a strata title, meaning they lack full legal control over the property.


2. Strata Title

  • Freehold and Leasehold : Buyers typically receive a strata title, granting them full legal ownership and control of the property.

  • PLS : Buyers are not entitled to a strata title. Consequently, they lack voting or decision-making rights in property management matters. For example, buyers cannot participate in the management committee (MC) or influence decisions on maintenance fees.


3. Resale and Rental Restrictions

  • Freehold and Leasehold : Buyers can freely resell or rent out their property without the developer's approval.

  • PLS : Resale and rental activities require the developer's approval, significantly reducing the property's investment potential and flexibility.


4. Legal Risks

  • Freehold and Leasehold : Buyers enjoy clear legal protection, and their ownership is not affected by the developer's financial status.

  • PLS : As the developer retains ownership, any financial issues or legal disputes involving the developer may impact the buyer's rights. For instance, creditors could claim the property.


5. Renewal Issues

  • Leasehold : After 99 years, buyers can opt to extend the lease by paying a renewal fee.

  • PLS : After 99 years, the usage rights typically revert to the developer, and buyers cannot extend the agreement.

PLS is Not for All Properties


Not all properties in Malaysia adopt the PLS model. Most residential projects still fall under freehold or leasehold ownership. PLS is more commonly associated with:


  • Developer Strategies : Some developers use PLS to retain long-term ownership of land and property while generating revenue from selling usage rights. While advantageous for developers, this model imposes more restrictions on buyers.

  • Specific Project Types : PLS is more prevalent in commercial projects or specific residential developments, especially in high-demand areas, such as luxury apartments or serviced residences.

  • Buyer Choice : Buyers are typically informed about the ownership type before purchase and can opt out of PLS properties by verifying the ownership details in the Sales and Purchase Agreement (SPA).

How to Avoid Purchasing a PLS Property


  1. Carefully Review the SPA

    Before signing any documents, thoroughly read the SPA to confirm the property's ownership type. If the agreement mentions the absence of a strata title or requires developer approval for resale and rental, it may fall under the PLS model.


  2. Consult Professionals

    Engage a lawyer familiar with Malaysian real estate laws to review the agreement and provide expert advice.


  3. Confirm with the Developer

    Ask the developer or sales agent directly about the ownership type and request written confirmation. Avoid purchasing if they cannot provide a clear answer.


  4. Choose Reputable Developers

    Opt for developers with a strong reputation and stable finances to minimize the risk of purchasing a PLS property.

Conclusion


The Private Lease Scheme (PLS) is a novel property ownership model that significantly differs from traditional freehold and leasehold ownership. Under PLS, buyers only gain usage rights, while the developer retains ownership, limiting the property's investment potential and flexibility. However, most residential properties in Malaysia remain under freehold or leasehold models. To avoid unintended PLS purchases, buyers should carefully verify the ownership type, seek professional advice, and conduct due diligence. This ensures better protection of their rights and a safer investment.

 
 
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