POLICE believe a fire that broke out in a vacant Williamson Street house was started by a squatter.
They are yet to establish whether the fire was deliberately lit or an accident, acting sergeant Kim Garsed said.
It was too early to know whether charges would be laid.
It is the second fire at the property in recent years.
The house has been abandoned since owner Lachlan Cohen bought it.
He hopes to subdivide the land for a development.
"We've actually been trying to get it knocked down for the past 18 months, since before the first fire," he said.
The council knocked back a demolition plan earlier this year.
The house is not heritage listed but the street is.
Mr Cohen said the difficulty both he and the council had in demolishing the building was that the single storey weatherboard house sat in an area with a heritage overlay, meaning he needed plans for what would replace the building before it could be demolished.
"When you are going through that process, you don't want to develop plans for the sake of getting a building knocked down," he said.
"By the time you go through market research, start formulating designs and start going through a tender process with consultants you are looking at three to 12 month period.
"During that process, you have a building here that is clearly causing issues. We refuse to rush the process with a random set of plans because there is no point in doing the job twice."
Mr Cohen had asked council whether the building could be knocked down, given he was clearly in the process of developing plans for the site.
"The biggest issue the council would have in a place under this overlay is someone knocking the place down and leaving it vacant," he said.
"We have new plans that the council want us to go back to, for revisions."
Mr Cohen believed there would be no harm to anyone getting rid of one house, but was not frustrated.
"They've got their processes and I completely understand that they are necessary," he said.
"There's got to be a level of discretion there that says we are not achieving anything by maintaining a building of this quality, especially in the state it is in," he said.
The council is being contacted for comment.
Firefighters have controlled a fire in a house in Williamson Street, Bendigo.
Crews were called to the scene just before 1.30pm with reports of a fire in a single storey weatherboard house.
Three fire trucks are on scene along with police.
Williamson Street remains open but drivers should take care while emergency services are on scene.
More to come.