Phillip Carpenter, President at Centinel Public Partnerships
Military housing in the United States is shaped by a system that is often overlooked but fundamentally essential to the financial stability of service members and their families: the Basic Allowance for Housing (BAH). This benefit is intended to provide service members the ability to cover the cost of housing, whether they live on a military installation or in the surrounding community. For military families, BAH is the primary resource used to secure housing—which means accurate calculation of that allowance is critical to ensuring access to quality living conditions.
The BAH amount is managed by the Department of Defense (DOD). It is to be based on a number of factors, including location and rank, and is intended to reflect local rental market rates, including utilities and cost of available, adequate rental housing. The challenge is that BAH is increasingly misaligned with the actual cost of housing in many markets. As local housing costs rapidly increase, the methodology used to calculate BAH has not kept pace.
This gap has real consequences. On-base housing is designed to service 30% of service members assigned to an installation. Roughly 70% of service members live off the installation and rely directly on BAH to secure housing in their local communities. When BAH does not reflect the local market rental comparisons, these families are forced to cover the difference out of pocket to maintain appropriate housing. While the families living in said privatized on-installation housing are protected from immediate out-of-pocket costs, the broader system imbalance creates ripple effects across the entire military housing ecosystem. Approximately $30 billion in housing allowances are distributed to nearly 1 million service members in the U.S. each year.
Through Centinel’s work operating communities under the Military Housing Privatization Initiative (MHPI), we see firsthand how BAH rates are tied to the long-term sustainability of military housing infrastructure. When rates are inaccurate, the private partners responsible for improving and revitalizing military housing are severely limited in their ability to do so. When rates accurately reflect the local market rates, the system functions as originally modeled, supporting affordability for families while providing on-base housing with the revenue required for day-to-day operational expenses and reinvestment in existing communities with future development.
Recent National Defense Authorization Act (NDAA) provisions aimed at improving the way BAH is calculated have acknowledged these challenges, but progress with DOD has been slow. Some of these proposed reforms include improving the accuracy and frequency of local market studies, increasing transparency around how rates are determined, and ensuring utility costs and rental markets are more accurately reflected in annual calculations. But we can go even further. At the core of the issue is the need for a modern methodology that better captures market dynamics in real time, including rapid rent growth, utility fluctuations and other local economic changes.
The path forward is clear: BAH must accurately reflect the cost of housing in the markets where military families live. Accurate rate calculations provide economic stability for service members living off an installation, improve recruitment and retention, and strengthen the long-term sustainment of privatized military housing. There must also be greater accuracy and transparency in how local market data is collected and applied, starting with clearer guidelines for systems and contractors responsible for these determinations. This evaluation must be held to a standard that reflects the urgency and importance of this benefit to military families. Even recent efforts to improve this measure have stalled, including the most recent version of the 2027 fiscal NDAA that has been circulating as of June 2026 but ultimately omitted concrete change to BAH provisions.
BAH is one of the most important quality-of-life benefits in the DOD. Its accuracy directly impacts day-to-day family stability for those who have chosen to serve our country. Modernizing how BAH is calculated is not simply a policy refinement, but a necessary step to ensure that military families are supported through economic changes.
Housing is not separate from military readiness—it is fundamental to it. Centinel remains focused on helping build sustainable housing solutions that provide service members and their families with the support system they need to thrive, allowing them to focus on their missions with confidence that their families are cared for at home.