In May 2016, at Congress’ direction, HUD set out to consolidate, update, and improve the Housing Quality Standards (HQS) and the Uniform Physical Condition Standards (UPCS), to implement a single inspection protocol for public housing and voucher units. After seven years of working towards that goal, HUD has published the Economic Growth Regulatory Relief and Consumer Protection Act: Implementation of National Standards for the Physical Inspection of Real Estate (NSPIRE)the NSPIRE Final Rule. This rule introduces HUD’s modern approach to defining and evaluating housing quality while reducing regulatory burdens, all with the goal of providing safer and healthier homes for residents.

The NSPIRE Final Rule will be implemented in two phases. On July 1, 2023, Public Housing will transition to NSPIRE, followed by the Multifamily Housing programs, Housing Choice Voucher (HCV), Project Based Voucher (PBV) programs, and the Community Planning and Development programs on October 1, 2023.

The NSPIRE Final Rule maintains a regulatory framework that streamlines, consolidates, and aligns inspection standards over 14 sections of regulations for HUD’s programs.  With the implementation of NSPIRE, UPCS and HQS will be retired. In addition, the NSPIRE guidance will impact properties that participate in the Low-Income Housing Tax Credit (LIHTC) Program, as Internal Revenue Service (IRS) Section 42 Guidance points to 24 CFR 5.703 and HUD’s UPCS as the physical condition standards for LIHTC properties (in addition to local building codes).

The NSPIRE Final Rule incorporates important changes based on public comments received during the rule’s proposal stage. Some significant revisions include the following:

  • New Self-Inspection Requirement and Report: Public Housing Authorities (PHAs) and property owners must conduct annual self-inspections of all units and address any identified deficiencies. Properties scoring below 60 on HUD inspections must provide self-inspection results to HUD, with records maintained for three years.
  • Timeline for Deficiency Correction: Clear guidelines are provided for addressing health or safety deficiencies. For life-threatening and severe deficiencies, PHAs or owners must rectify the issues within 24 hours of receiving the inspection report and provide evidence of correction to HUD within 72 hours.
  • New Affirmative Requirements: HUD has developed “affirmative standards” that apply to all units participating in HUD’s rental assistance programs. These standards cover basic habitability requirements, such as functional kitchens and flushable toilets, as well as crucial safety aspects like Ground Fault Circuit Interrupter (GFCI) outlets, permanent heating sources, and safe drinking water.
  • Tenant Involvement: Tenants will have the opportunity to make recommendations for units to be inspected. Any units inspected in addition to the standard unit sample will not be part of the property’s score. Still, PHAs or owners must address all identified deficiencies within specified timeframes and share the inspection results with residents.

Apart from the key revisions mentioned above, the NSPIRE rule encompasses additional measures to improve HUD oversight and housing quality, including:

  • Regular review of standards every three years by HUD
  • Retention of the 3-2-1 rule
  • Revisions to deficiency categories: life-threatening, severe, moderate, and low (new)
  • Introduction of the post-inspection report (new)
  • Mandatory smoke detector and carbon monoxide alarms
  • Removal of occupancy requirement related to children of the opposite sex
  • Elimination of cosmetic deficiencies
  • Balancing Safety and Affordability:

Further transition information will be provided in three core “Subordinate Notices,” which will follow this final rule. Once published, these notices, combined with the NSPIRE Final Rule, make up HUD’s regulatory guidance for physical condition standards and inspection processes.  These core Subordinate Notices are the NSPIRE Standards notice, the NSPIRE Scoring notice, and the NSPIRE Administrative notice. HUD will also issue additional notices on the NSPIRE Standards for the HOME, HTF, ESG, HOPWA, and CoC programs. Public and Indian Housing (PIH) will issue additional Departmental notices to implement the Small Rural Assessment requirements under part 902, subpart H, and part 985.

The publication of the NSPIRE Final Rule marks the dawn of a new day in physical condition standards and inspection regulations for HUD-assisted and insured housing. It is important to understand these changes, and how they will impact your property.  That is why NCHM has developed Understanding NSPIRE” a two-hour webinar designed to provide participants with a comprehensive overview of NSPIRE and its implications, helping PHAs, Owners, and Agents (POAs) of properties subject to these new rules interpret the many changes in the transition from HQS and UPCS to NSPIRE. The first session in May sold out quickly, and there is limited seating available for the second session in June. Due to popular demand, NCHM has added a third session in July. We encourage all interested individuals to register as soon as possible to secure their spot, as seats are expected to fill up rapidly. Don’t miss out on this opportunity to stay informed and prepared for the changes brought by NSPIRE.

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