A guest at Parnell's City Garden Lodge said he had to scramble out the window with his bags to freedom as it burned.
Benjamin Rees said the backpackers was accommodation provided to him by Work and Income (WINZ) after being homeless for a month.
Rees said he was having a nap in his room on the second-storey on Sunday afternoon when he heard someone walk up the stairs and say, "set fire to the place".
"All of a sudden, smoke came billowing over my door," Rees said.
"So I grabbed a couple of items. I grabbed my guitar and a couple of bags, threw them out the window, jumped onto that [roof], threw my stuff into the tree, jumped into the tree and onto the ground."
Benjamin Rees stands in front of the City Garden Lodge, which he escaped from as it went up in flames on Sunday afternoon. Photo: RNZ / Jordan Dunn
He said the fire was "well under way" by the time he managed to get out of the building.
He estimated the lodge was "completely gutted" within 20 minutes.
Rees described the building as a "tinderbox".
"In the kitchen there was no fire extinguishers, even though there was a fire extinguisher cage for them."
"The fire escape itself was made of wood, so I mean, fire burns wood," he said.
Auckland's deputy mayor Desley Simpson earlier told RNZ's Morning Report the council had been working with the lodge's owner over "a number" of compliance issues related to external escape routes since last year.
A firefighter works to put out the blaze. Photo: SUPPLIED
However, she said a short-term repair was in place and the lodge had been due to undergo a final council inspection on Tuesday.
The building had received a warrant of fitness in November last year, she said.
But Rees called the lodge a "hole", and an "absolute dive", with negative influences for people like himself who were recovering from smoking methamphetamine.
"When they put me in here, the room had urine and faeces ... all over the carpet and everything," he said.
Despite the poor smell, Rees said he had to take the accommodation out of necessity because he was homeless at the time.
Benjamin Rees says there were no fire extinguishers in the lodge's kitchen, despite a fire extinguisher cage for them being present. Photo: RNZ / Jordan Dunn
He said WINZ had not yet given him any indication about where he might be accommodated following the fire.
The lodge was not being used as emergency accommodation, the Ministry of Social Development has confirmed. The ministry has been asked to clarify if this included transitional housing.
The fire broke out around 4.30pm on Sunday and 16 crews were called to help bring it under control.
Firefighters were no longer at the scene but investigators were expected to return to the scene to investigate the cause of the blaze on Monday.
Assistant fire commander Barry Fox said while the fire was out, the building was too unstable for anyone to go in.
"The intermediate floors have been burnt out, we can't put staff into that building, so we've utilised an aerial appliance to maintain a perspective from the air, plus we've also got our drone team on the site surveying the damage."