Starting in January 2006, in areas of the United States where rents have declined, servicemembers of equal rank and marital status living off base will begin receiving unequal amounts in Basic Allowance for Housing (BAH). Don't blame a pay error. The allowance disparity will result from the scheduled end to the BAH program's "geographic rate protection."

Since 2000, when DoD and Congress began to close a 19-percent gap between stateside housing allowances and average local rental costs nationwide, 910,000 servicemembers living off base have enjoyed two types of BAH rate protection: individual and geographic.

Individual rate protection, which will remain in effect, guarantees that BAH will not decline after servicemembers move into an assignment area, even if subsequent housing surveys show local rents have fallen over time. This protects members who take out mortgages or sign long-term leases from getting pinched by annual allowance adjustments.

Geographic rate protection, on the other hand, was intended to be a temporary tool. It ensured that servicemembers newly arrived in an assignment area received no less in BAH than members of the same rank and dependency status already assigned there. DoD officials had reasoned that it was only fair to stabilize BAH rates in this way until extra BAH increases could close the gap between allowances and average rental costs.

The 2005 BAH rates were the final phase of the planned "buy down" in out-of-pocket housing expenses. With the BAH gap closed, geographic rate protection is going away.

The effect will be seen only in areas in which rental costs have declined over the last year, thus lowering BAH for newly assigned members. Individual rate protection will continue to keep BAH level in these areas for families who settle in before Jan. 1, 2006.

In most areas where BAH drops for new arrivals occur, it likely will be felt only for certain types of housing and therefore certain pay grades, a Pentagon pay official explained. One such area could be Washington, D.C., where news reports already suggest some softening of local rental properties traced to an investment bubble in real estate.

Low interest rates have encouraged many would-be renters to vacate rental properties and buy their own homes. That trend also increases the price of homes, which encourages investors - who are still helped by low interest rates - to buy second homes or rental properties, thus softening the rental market even further.

Actual 2006 BAH rates won't be announced until December 2005. They will be based in part on nationwide rental surveys conducted in 2005 from May through July by a DoD contractor that took a look at median current rental costs, utility costs, and renter's insurance for six different types of homes: one- and two-bedroom apartments, two- and three-bedroom townhomes, and three- and four-bedroom single family homes.

BAH rates are set so that servicemembers moving into an area can rent appropriate housing for their rank and dependency status. Those who rent homes above their pay grade standard still will have to pay costs out of pocket. If rents have declined in an area since 2004, BAH rates can be reduced, and newly arriving servicemembers will begin to see the effect next year.

So, for example, it's possible that a married E-6 moving into a Washington, D.C., assignment next year actually could receive less in BAH than a married E-6 who already is living there, if the survey shows a drop in prices.

Housing officials still are projecting that BAH in most areas and for most pay grades will increase to reflect the continuing nationwide increase in rents. The increase is likely to be smaller than in previous years because there no longer is a buy down under way to fill a gap between allowance and rental costs and because growth in rents nationwide has slowed.

"You will still get areas where there are significant BAH increases," according to one official. "But for the first time you will see some areas where rates are decreasing, at least for some pay grades."

Tom Philpott is a freelance writer and syndicated news columnist. His column, "Military Update," appears in 48 daily newspapers throughout the United States and overseas.