Congress and the Defense Department continue to make military members’ and military families’ quality of life a priority, recognizing its importance for recruitment and retention. Recently, they have focused on advancing investments in pay, family support, housing and installation infrastructure. But one of the most important benefits affecting service members and their ability to obtain quality, affordable housing relies on a methodology and system that no longer reflects today’s housing markets. It’s time to modernize the antiquated process for Basic Allowance for Housing (BAH) in order to support military families and strengthen readiness.

The DoD manages BAH and calculates rates based on factors such as location, utility expenses, pay grade and dependency status. The goal: Ensure service members can afford adequate housing in the communities where they are assigned. However, today’s housing market has evolved much faster than the methodology used to determine those rates. What’s more, BAH is calculated in arrears and based on housing that is currently vacant.

Housing markets have shifted dramatically over the years, with sharp rent increases, higher utility costs and rapidly changing inventory levels. In some markets, homes are sold during a family’s lease, requiring them to vacate their housing. Unlike civilian families, military families cannot adjust their location in response to affordability pressures. Assignments are driven by mission requirements, not housing costs or a family’s financial ability.

When BAH lags behind local markets, families are often forced to absorb rising costs to live near the installations where they serve.

BAH is often viewed as a housing benefit, but it is one of the foundational components of a military family’s financial wellbeing. It enables nearly one million service members to secure housing, whether they live on a military installation or in the surrounding community, while also supporting the financial framework that sustains privatized military housing across the country. When BAH accurately reflects local housing markets, the system works as intended. When it doesn’t, the consequences ripple throughout the entire military housing ecosystem.

The impact extends well beyond individual households. Approximately 70% of service members live off a military installation and depend on BAH to secure housing in their local communities. The remaining families living in privatized housing on an installation are shielded from immediate increases in housing costs, but they are still part of a system whose long-term sustainability depends on accurate BAH rates.

Through Centinel’s work operating military housing communities across the country, we see how closely the health of those communities and the effectiveness of military housing infrastructure are tied to a BAH system that must keep pace with local markets. Under the Military Housing Privatization Initiative (MHPI), BAH becomes the financial engine that supports operations, maintenance, resident services, capital investment and long-term reinvestment across military housing communities.

That model comes under pressure when BAH lags. Families living off installation face greater financial strain, housing providers have fewer resources available to maintain and modernize communities, and over time, the gap between housing needs and available investment continues to grow.

This is why BAH should be viewed as a compensation issue, impacting readiness and military families everywhere, especially during their frequent moves.

A Military Family Advisory Network (MFAN) study found families typically absorb about $1,900 in unreimbursed costs and lose nearly $3,000 more in damaged or missing property during each move. MFAN has also reported that housing and rent gaps, security deposits, application fees and differences in housing markets frequently drain family savings.

The DoD has recognized that military readiness extends beyond equipment and training to quality housing, reliable childcare, healthcare access and family support. Housing and BAH must be part of that same conversation.

Recent National Defense Authorization Act (NDAA) proposals have included provisions aimed at improving the accuracy and transparency of BAH calculations by strengthening local market analysis and better accounting for utility costs. However, there has been little progress in their implementation to date, and these efforts should be viewed as the beginning of the BAH modernization, not the end.

The Senate Armed Services Committee’s fiscal year 2027 NDAA also advanced several important quality-of-life initiatives, including a proposed 3.6% military pay raise. However, it stops short of making meaningful structural changes to how BAH is calculated. Pay increases remain important, but they cannot solve housing affordability challenges if the underlying methodology does not keep pace with today’s markets.

The solution is not spending more on BAH. It is ensuring the system is better equipped to reflect the total cost of today’s housing market, through greater transparency in how rates are determined and more streamlined regulations for the systems responsible for collecting and applying market data. Doing so will shed better light on the overall process and ensure that rates align with the most up-to-date local information.

Modernizing BAH would not only enhance military families’ ability to maintain financial wellbeing, but also help sustain privatized military housing communities that assist 30% of families in a local market. It would strengthen military recruitment and retention, which is why the DoD requested and Congress approved privatized housing back in the 1990s. Prospective service members increasingly evaluate military service through the lens of financial stability and quality of life. Existing service members weigh those factors when deciding whether to continue serving. Housing uncertainty should not be another obstacle for families who already accept the unique demands of military life.

The military asks extraordinary things of service members and their families, including frequent relocation and adjustment. The least we can do is ensure that the housing benefit designed to support these service members reflects the realities of the markets where they live.

Getting BAH right goes beyond just keeping pace with housing costs. It’s about preserving the long-term sustainability of military housing, strengthening public-private partnerships that support installation communities and ensuring military families have the stability they deserve. Modernizing how BAH is calculated is one of the most practical and impactful steps policymakers can take to strengthen both the armed forces and the families that risk everything to defend our country.

Phillip Carpenter is president at Centinel Public Partnerships.

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