Malhotra has been given a two-month period to vacate the hosue, which is under the Delhi government Public Works Department (PWD).
"We have asked Malhotra to vacate the 6, Bishambar Das house in next two months. He has also been asked to pay the due rent of around Rs 7 lakh at market rates," said a senior government official.
"I have already paid Rs 5 lakh and there is only one month rent dues which I will soon pay to the concerned authorities," he said.
Malhotra was allotted the bungalow at Bishambhar Das Marg in central Delhi after he had defeated Congress leader Jagdish Tytler in Lok Sabha elections from Sadar Bazar.
The house was again allotted to Malhotra in 2009, when he became the Leader of Opposition in the Assembly. He continued to reside in the bungalow despite not contesting the Assembly elections in 2013 and 2015.