NSPIRE Inspection Protocols to Replace UPCS, HQS Standards

HUD is in the process of transitioning to a new housing inspection program. HUD recently published a notice announcing that beginning April 1, HUD-assisted sites enrolled in HUD’s NSPIRE demonstration program will switch from receiving “advisory” housing safety inspections to receiving “inspections of record.”

NSPIRE, which stands for the “National Standards for the Physical Inspection of Real Estate,”  will replace HUD’s current protocol for inspecting housing safety. HUD’s NSPIRE changes to the Real Estate Assessment Center (REAC) is scheduled to roll out as of Oct. 1, 2023.

The context: In 2019, HUD sought volunteer PHAs and owners of private HUD-assisted multifamily properties to participate in the NSPIRE demonstration program. This program is a part of HUD's efforts to test the overhaul of exiting 20-year-old Uniform Physical Condition Standards (UPCS) inspection protocols. The program tests new approaches for making certain thousands of public housing authorities and private owners provide housing that’s safe and livable.

The NSPIRE demonstration assesses all aspects of REAC’s physical inspection process, including the evaluation of physical inspection data and a new scoring model. The goal is to design a new simplified inspection system that more accurately reflects the physical conditions within housing units and to place a greater emphasis on issues like lead-based paint hazards and mold.

What’s next: HUD’s announcement also revised the end of the NSPIRE demonstration program. It will end for Public Housing participants on June 30, 2023, the day before HUD intends to begin inspections under NSPIRE for Public Housing. The demonstration will end for Multifamily Housing participants on Sept. 30, 2023, one day before the day HUD intends the NSPIRE final rule to take effect for Multifamily Housing. HUD’s announcement states that the agency will provide additional notice should those dates change.

Why it matters: LIHTC programs will change to the new NSPIRE Standards. Existing Treas. Reg 1.42-5 (Monitoring Regulations) directly references 24 CFR 5.703, which currently references the UPCS Inspection Protocol. Once the final notice is published, the NSPIRE standards will be posted at 24 CFR 5.703, which will sunset UPCS and replace it with NSPIRE. Therefore, unless the IRS explicitly states otherwise, as of Oct. 1, the inspection standards for monitoring will become NSPIRE.