People are still unaccounted for in the aftermath of a furious blaze that destroyed a derelict Dunedin boarding house this morning.

Fire and Emergency New Zealand incident controller Senior Station Officer Pete Douglas said as extra crews arrived they identified people possibly squatting at the property who had not been accounted for.

“We are now currently working with fire investigators and police because we still have an unknown number not accounted for.”

From Fenz’s understanding, the building was under repair, but there may have been people transiently using the building.

The cause of the blaze was too early to say, Douglas said.

Crews were called to the fire, in Phillips St, Kensington, about 6.35am.

A Fenz spokesman said they received multiple calls about the fire, and the property was well ablaze when crews arrived.

Otago Assistant Commander Rob Torrance said builders who had been renovating the property had told him up to five homeless people were known to sleep there.

“We’re just investigating that possibility now, so we’ll be here for a while yet.”

In an update about 11.20am, incident controller Pete Douglas said there was no confirmation as yet whether anyone was in the property.

He said the cause of the fire was not yet known.

Crews with breathing apparatus were working through the interior of the house, and a neighbouring property, to make sure the fire was fully extinguished.

Douglas said the fire had spread to two neighbouring properties. One had only minor exterior damage but the other had been extensively damaged outside, with some lesser damage inside.

Photo / Stephen Jaquiery

The occupants of those houses had been evacuated safely.

Crews had made an outstanding effort to stop the fire spreading further, he said.

Five fire trucks and the command unit were at the scene, and Mr Douglas said he expected firefighters would still be at the scene for several hours.

Cordons remain in place on the surrounding streets.

A Fenz spokesman earlier said they had not had reports that anyone was inside the home or injured, but they were searching the building as standard procedure.

Sergeant Aaron Burgess said police were working with fire crews, and a drone would be used to assist investigators.

A resident of the neighbouring boarding house, which was also damaged in the blaze, described being woken up around 7am and told there was a fire.

“Someone saw the fire from the street and came and banged on the doors and knocked on my window.”

“I woke up and had no idea what was going on, I was just lucky I had something on. One lady came out with no shoes and another man with no shirt, and it was freezing.”

The residents of the boarding house were left wondering where they would live.

“I have no idea where to go for a couple of days, I haven’t got anything sussed out.

“I think maybe the landlord is sussing some people out, but I haven’t talked to them at all.”

An Otago Daily Times photographer at the scene shortly after 7am said the property had burnt to the ground and crews were focusing efforts on a neighbouring property, which had smoke coming from the roof.

Police were asking asking motorists to avoid the area, because of the fire, and a separate incident, in which a truck hit power lines just before 6.30am.

Fenz has confirmed the two incidents are unrelated.

A police spokesman said King Edward St was closed near the intersection of Wilkie Rd, and South Rd was closed between Princes St and Eglinton Rd.

The Phillips St building was in the process of being demolished by owner Brent Mathews after it had been gutted by a blaze in which one man died in April last year.

A homeless man who didn’t wish to be named but who lived at a nearby boarding house was moved out of the razed building after the first fire, along with a woman in her 60s and other tenants.

FENZ at the Dunedin blaze. Photo / Stephen Jaquiery, ODT

They were moved to another boarding house nearby on High St, and saw the fire this morning.

The man said: “It was a shock to see the flames from my window. It was a terrible place to live. You get places like that. It is just the way it is.”

The man said there “were rumours” that homeless people had been hunkering down in the property that burned down today.

Janine Walker, of Dunedin Bedding Bank - which supplies survival equipment to homeless people such as sleeping bags - said she had also heard the rumour, and knew that this was happening in derelict buildings across the city.

She added: “Fire is a massive risk around cold homeless people, whether they are in a three-storey building or a half-demolished building. More urgently needs to be done to protect our homeless people and when there is a fire, if they don’t die, they are pushed from pillar to post.”

Walker was trying to talk to police about the safety of a homeless person who she knew was living rough nearby. “Other people in buildings have been evicted but the police haven’t checked on the woman.”

Mathews, the owner, was contacted but did not give a comment.

Bridgestone Mosgiel owner Dean Smith told The Herald he saw smoke billowing out of the home as he was driving across the motorway.

“I couldn’t believe it, I could feel the heat of the fire and I watched it for about five minutes.

“This [home] just disintegrated in no time at all, it was just an inferno.”

Smith said he watched the fire spread quickly to a neighbouring property.

“They’re very old historic houses in an old part of town, very hard to get to for the fire service.

“It’s spread up the walls of the house on the right ... it looked like they contained it but there was a heck of smoke coming out of the roof of the [other] household.

“I thought, ‘Oh no, she’s gonna go up as well. They’re very old, dry houses, that’s for sure.”

Fenz shift manager Blair Walklin said the blaze had caused damage to “a couple” of neighbouring properties.

Walklin couldn’t confirm the extent of the damage to those properties.

He said crews had dampened down the blaze significantly.

The Government undertook a national audit of fire risk in three-storey boarding houses this year, but only one was reported by Dunedin City Council, the former backpackers Stafford Gables.

- by Laine Priestley and Mary Williams, Otago Daily Times