Military Housing

Basic allowance increases

By Erica Rascón on Feb 3, 2014 in News

The US Department of Defense has issued a press release detailing changes in 2014 military housing allowance rates. Most service members will receive additional funds for housing just as fourth quarter market analyses report rent rate hikes.

Basic Allowance for Housing (BAH) assists service members who have permanent stations in the US. With the allowance, service members are able to obtain rental housing comparable to civilians within a similar pay scale.

Each year, BAH is revaluated using data from 306 regions. To create BAH estimates, the Department of Defense acquires data on existing vacancies from property managers, utility cost from The American Community Survey, and renters insurance coverage by state. As these costs have risen in many regions, the average BAH has also risen. BAH does not cover mortgage and other homeownership expenses.

For 2014, nearly 1 million new and existing service members will benefit from a 5 percent increase in their housing allowance. This allowance ranges from an additional $75-$85 per household, depending on the number of dependents, location, and pay grade. In some cases, service members will experience a significantly greater increase. Service members in Mobile, AL, Honolulu County, and Minneapolis-St. Paul, for example, have received increases above 14 percent.

Laura Baran and Captain James Baran are stationed in Austin, TX with their young son. “Last year’s BAH only covered the cost of rent,” Laura explains. “Our BAH did increase about 7% this year. This will help with utilities, but still not cover them completely. We also don’t know if rent will go up come time to renew our lease.” Even with the increase, the Barans may face out of pocket costs for renters insurance and utilities.

BAH increases are more valuable now than in the past, it seems. Civilians battle a tough rental market without housing allowance increases. Before the recession, homeownership appealed to a larger sector of the population. Rental vacancy rates were relatively high, keeping costs competitive. Post recession rental markets rest on the other end of the spectrum, with low vacancy rates and sky-high prices, especially in cities with large young adult populations. In the final quarter of 2013, civilian landlords raised rents an average .8 percent. Hot markets like Seattle, DC, and San Francisco witnessed more drastic increases, totaling 5-7 percent year-over-year. Military families  who are experiencing rent hikes may at least use BAH adjustments as a buffer. They may also opt to live on post, which often absorbs utility costs and renter’s insurance up to a certain amount.

There are exceptions to the overall rise in housing allowances. Some cities, such as Sacramento and Yuma, will experience a decrease in BAH. This change reflects more affordable living conditions in those areas. Unlike BAH increases, current service members will be grandfathered into their previous BAH allowance. Only new reports will receive the lower rate.

Service members can calculate BAH adjustments using BAH Calculator.