Government Increases Ground Rent for 5-Star Hotels, Issues Notices Worth Crores

The Union government has significantly increased the annual ground rent for several prominent five-star hotels in New Delhi, prompting legal challenges from The Imperial and The Claridges.

The Land and Development Office (L&DO) under the Union Ministry of Housing and Urban Affairs issued demand notices in March, seeking Rs 177.29 crore from The Imperial and Rs 69.37 crore from Claridges for ground rent due since 2002 and 2006, respectively.

The revised rates are calculated as Rs 8.13 crore annually for The Imperial and Rs 3.85 crore for Claridges, a sharp increase from the previous rates of Rs 10,716 and Rs 8.53 lakh. The hotels argue that the revision is arbitrary and retroactive, violating lease terms. The Imperial’s last revision was in 2006 for the period up to 2032, while Claridges’ was revised in 2016, valid until 2046.

Both hotels have moved the Delhi High Court, which has scheduled the next hearing on July 22. The court ordered the L&DO to hear the hotels before finalizing the ground rent. Notices have been issued to other five-star hotels in Delhi as well, indicating a broader application of this revised ground rent policy.

The Imperial’s lease dates back to 1932, with the property on Janpath Lane leased for hotel construction when New Delhi was being developed. Claridges’ lease began in 1936 on what is now Dr. A P J Abdul Kalam Road. The L&DO cites an ad-hoc policy from 1983 for its calculation methods, stating the new rates are 5% of the land value prevailing in 2002 and 2006. The hotels were given 30 days to comply, with a 10% annual interest penalty for non-payment.