A motel owner who allegedly misused thousands of dollars in taxpayer money received more than $1 million from the Government after his actions were discovered.

In 2018, the Ministry of Social Development (MSD) paid Auckland Astro Motel director Zain Syed $60,800 to house homeless people at the Ōtāhuhu motel.

Instead, he allegedly moved the family into a property he was renting for $500 per week - and pocketed $52,800 in profit.

In May, the Tenancy Tribunal ordered Syed to pay his landlord $50,000 after it found the arrangement amounted to illegal sub-letting.

READ MORE:

*Tenant made more than $60,000 after illegally sub-letting rental to homeless

*'Rat hole' motel investigation sparks emergency housing shakeup

*Landlord to keep $50,000 tenant made by allegedly misleading Government agency

*Emergency housing stocktake uncovers complaints about gangs, sex workers and dirty rooms

GOOGLE MAPS The rental property, which tenant Zain Syed illegally sub-let to MSD clients, according to the Tenancy Tribunal.

MSD later confirmed it had no plans to seek the return of the funds.

MSD's general manager of housing Karen Hocking said Barfoot & Thompson notified it of the issue in November 2018.

However, MSD continued to place homeless people at Auckland Astro Motel for another seven months due to a shortage of suitable placements.

CHRIS MCKEEN/STUFF Auckland Astro Motel has received $6 million to house emergency housing clients.

During the first half of this year, Syed received $1.25 million from MSD to provide emergency housing to 227 clients. The last payment was made on June 4.

In total, Auckland Astro Motel received more than $6m in emergency housing grants since 2016.

Hocking said MSD used Auckland Astro Motel as "a last resort" after it became aware of compliance issues raised by Auckland Council.

"South Auckland is a region facing significant demand for housing with the wider context of the housing crisis across New Zealand."

In February 2019, MSD's regional director for south Auckland told Auckland regional commissioner Mark Goldsmith staff were moving clients out of Auckland Astro Motel as quickly as possible.

But as the need for emergency housing soared, a lack of alternatives led to more people being referred there.

Documents obtained by Stuff under the Official Information Act showed a public servant raised the alarm about Auckland Astro Motel charging motel rates for a standalone house in August 2018.

AUCKLAND ASTRO MOTEL WEBSITE Online reviews for the Auckland Astro Motel claimed photos posted the business' website were not an accurate reflection of the facilities.

The service centre manager said the property was "not in any condition for anyone to move into when the client and her children moved in".

"We need to obtain some clarification from somewhere about the blatant abuse of vulnerable clients who are being taken advantage of," they wrote in an email.

"If our case managers are not aware of this practise then we are letting these rouge landlords get away with misappropriation of Government funds for their own benefit."

Goldsmith told Stuff although the accommodation Auckland Astro Motel provided was "far from ideal", it was preferable to families sleeping in cars, garages or overcrowded properties.

MSD took its responsibility to use public money prudently seriously, he said.

"We're not aware of any allegations of fraud by this provider during the period they were a supplier of emergency housing."

Syed has since sold the business, which is now operating as the Pacific Motel.