Why is the rent so high around the bases?

I must first explain that there are many different markets surrounding the bases. Places like Cambridge has too many over riding markets such as the student, young professionals commuting from London, and academics so the American military is not catered to as seen in places like Brandon, Thetford and Mildenhall. Newmarket has an interesting mix because the town itself is centred on the horse-racing industry but also it and the surrounding villages also have commuters from London and Cambridge.Bury St Edmunds is much the same, it doesn't rely on the USAF as its only market as there commuters and local workers that live here.

Houses are more expensive here than in the U.S. This is because of the land that they sit on is so expensive and not much to do with the house. Also there is a housing shortage particularly in the East of England. Here is a great video of house this is affecting the country.

Supply and demand dictates that when there is less of something, the more valuable it is. You will find that houses tend to be less expensive when you move away from city centres. For instance, I live in Histon, outside of Cambridge. The houses here are expensive because of its proximity to Cambridge but nothing like the centre of Cambridge. I do not think I will ever be able to buy in Cambridge. I was lucky enough to be able to afford the house that we live in but that is only because of the settlement from my husband's accident.

Yet, if you move up North, the houses are a fraction of the price of the houses in this region. Houses are cheaper but if you go towards city centres like York, the prices go up again. It is especially high near areas of activity. So the further you go away from the bases, the more you get for your money. That is the way it works in the US as well.

The rental housing market is a business and landlords seek to make at least 8% on their return, this is a very low return on a property. A house sold in Mildenhall in 2002 for £60,000 would be rented out at £400 pcm but is now on the market in 2015 for £140,000 and rented at £933 pcm. This just highlights the costs of the rent and how they can vary. The way that things go, the house which was once suitable for the American market is now only able to be rented to local families or would be sold off to a first time buyer.

The Overseas Housing Allowance does play a part in this as well. Let's take a two families:

  1. An American USAF 25-year old married E-5 with two children (too young for school). At the current OHA rate in March 2015 is £1150 or £13,800 if they rent at the top of their cap which is what most people do because they cannot pocket the difference. They also get £531 in utility allowance.
  2. A local couple the same age with two children (too young for school) and earning £20,000 per year (this is at the higher end of the pay range for the Tri-base area as per the Guardian). Their take home pay is £1,668 after taxes.
In this case, both wives do not work in order to stay at home with the children because childcare is so expensive. Although these couples are the same age, same family situation and same area are in two different markets. The USAF has all of their OHA to use on their rent which means that they are able to rent at the higher end of the renting scale.

The local family has to use their salary to cover their rent, utilities and council tax (which. the USAF is exempt). Council tax is based on the value of the house in 1993. You will see in the adverts the Council Tax Band because people have to take this into account. I saved myself £300 per year by moving into a home with a lower Council Tax Band. See what you would have to pay for your house here.

One problem arises from this disparity is that many people want to live where there are a lot of local children and people their age. This is a problem because the USAF can often afford at a young age what a local could hope for later in life (when the children have grown).

Some people like to think that Americans are being taken for a ride because of the OHA. I think that this is not a fair statement. The DOD sets the OHA and increases it every year which in turn increase the market for investment properties (and the value of the houses). If the OHA was the market rate, I think that people would be very unhappy with the houses that they would be able to afford (making them equal to the locals at the same stage in their lives) or they would have to pay out of pocket for the houses that they live in now. The 'No fees for USAF' helps save people at least £200 because they don't have to pay for background checks. Americans are able to get out of their lease due to the military clause, where if they are offered base housing after 6 months of their lease, they can get out of it. Locals have to stay at least a year and if they get out of it before that, they still have to pay out of the rest of the lease.

I thought I would just shed some like on the topic.

All the Best!

American to Britain