A schizophrenic man who beat a friend to death after being released from psychiatric care - despite telling staff he wanted to kill someone - is allowed back into the community without supervision.

Matthew John Ahlquist, 35, was found not guilty of the murder of Colin Moyle on the grounds of insanity and sent to the Mason Clinic, a secure psychiatric hospital, as a special patient in December 2008.

Ahlquist threw boiling water on Mr Moyle, 55, bludgeoned him with a spade and set him on fire at Mr Moyle's Auckland home in April 2007 because he thought he was "demonic". Two expert psychiatrists later diagnosed Mr Ahlquist with paranoid schizophrenia and Justice Geoffrey Venning ruled he was not guilty by reason of insanity.

The violent death of Mr Moyle happened a few weeks after Ahlquist was released from Te Whetu Tawera, an Auckland DHB mental health clinic, despite Ahlquist threatening to kill someone.

The Health and Disability Commissioner is currently investigating the case after a previous external review found "evidence of unacceptably poor clinical judgment and practice by some medical and nursing staff".

Now, the Moyle family have been told that Ahlquist will be given unescorted leave from the Mason Clinic less than two years after he was committed by the High Court.

A letter from the Waitemata DHB said Ahlquist had achieved and maintained a level of clinical stability which meant the unsupervised leave was a safe part of his rehabilitation.

"We believe this step does not place you at any risk," the Waitemata DHB wrote to Colin Moyle's brother Graeme.

Mr Moyle told the Herald he was not worried about his personal safety but the potential risk to the community.

"We are concerned that history will repeat itself. That's exactly what happened last time when he was released. He might be fine where he is because he's medicated and stable," said Mr Moyle.

"You stick him out in the community and he might not take his medication. If he's unescorted, there's no guarantee he's coming back. He could just jump on the next bus."

Mr Moyle was referring to when Ahlquist was readmitted to Te Whetu Tawera in March 2007, where staff considered compulsorily detaining him. A report obtained by the Herald says he told staff he wanted to kill somebody but then became guarded, insisting he made the statement because he was "off his head on painkillers".

He was admitted informally but was not diagnosed as being psychotic and was discharged 12 days later after getting drunk in the ward. Ahlquist's family expressed their anger at the "inappropriate discharge", and a few weeks later Mr Moyle was dead.

Jack and Lois Ahlquist believed their son should have already been in the Mason Clinic after a serious and unprovoked assault on his father in 2005.

A mental health worker wrote to the Auckland District Court with his concerns that Ahlquist could not be treated in the community and should be committed to the Mason Clinic.

"Mr and Mrs Ahlquist are now understandably fearful of Matthew... We feel the risk to Matthew's father will rise to an unacceptable level if Matthew is discharged into the community," the letter said.

Mrs Ahlquist declined to comment yesterday.

The Health and Disability Commission has completed a provision report which is currently being checked by its lawyers.

Mason Clinic director Dr Jeremy Skipworth could not comment directly on the Ahlquist case because of privacy laws. But he said any decision to grant leave to a patient found not guilty of murder by reason of insanity was a carefully considered process.

"I fully understand the position of the victims and the difficulty they have. It's an incredibly difficult situation."

Permission for unescorted leave had to come from senior Health Ministry officials and Dr Skipworth pointed to the successful track record of releasing psychiatric patients back into the community.

"The reoffending rate is incredibly low," said Dr Skipworth.

"That will provide little comfort to victims of crime, I appreciate that, but we have a different focus to help patients get back into the community and lead a healthy and productive life. "It's not appropriate to lock people up indefinitely."