With the announcement of the Department of Defense’s new Basic Allowance for Housing (BAH) rates for 2023, we know military families have questions about how the new rates will impact them and how Military Housing Privatization Initiative (MHPI) providers will use the money to deliver exceptional living experiences to residents.
Sustaining communities designed for the modern military family
Privatized military housing communities are designed to support the unique needs of the modern military family. The Department of Defense allocates Basic Allowance for Living (BAH) to each service member and arranges for the money to be paid to the housing provider to cover the cost of operating military housing communities. The amount of BAH allocated to each service member depends on geographic location, pay grade, and their number of dependents.
BAH payments cover much more than just the basic cost of maintaining homes. They support all expenses related to housing and community operations, including security deposits, rent, water, gas, and electric utilities, maintenance services, real estate management services, community centers, and the costs associated with long-term borrowing taken on to support privatized installation housing.
Any remaining BAH revenue is reinvested into installation housing to ensure the long-term viability of the properties, including renovations, new home construction, and upgraded amenities. Housing providers also invest in renewable power generation and energy-efficient systems to make installations and housing communities more sustainable and environmentally friendly.
Ensuring housing costs don’t increase for residents
This year, inflation has caused housing prices to rise and created a shortage of affordable housing for service members struggled to find affordable housing in some regions of the country where housing prices continued to rise after a year of record-high increases. In 2022, rental prices in the United States increased by nearly 8% on average. While some off-base housing providers increased rental costs for residents, MHPI providers continued to operate within the pre-set BAH rates.
As the primary source of funding for privatized military housing communities, the increase in BAH will help MHPI providers support the housing program and keep pace with the increasing costs of operations, including the rising price of materials, higher fees for third-party services, and increased labor costs. The increase in BAH will also provide greater economic security for residents living in MHPI communities and help ensure the housing providers are able to continue to invest in high-quality housing on-base.