The fire is one of several police are investigating in the city.
A Fire Service spokesman said crews from Dunedin City Station and Willowbank Station were called to a two-storey house on fire in Stuart St, near Strathmore Cres, just before midnight on Saturday.
The house had a flat upstairs and a flat downstairs.
A yellow wheelie bin used for recycling had been set on fire by the entrance of the downstairs flat.
The resident of the bottom flat, Jeanette Cleaver, said she was not home at the time.
The fire had shattered glass, destroyed several weatherboards and the front door needed to be replaced, she said.
The flat had no smoke alarms, she said.
She was thankful a resident in the flat upstairs helped extinguish the fire before the crews arrived.
"He saved the day."
Upstairs flat resident Troy Janson said he did not consider himself a hero.
He and another flatmate were sleeping in the upstairs flat but were woken when an off-duty policeman knocked on the door.
Mr Janson answered and was told by the policeman flat the downstairs flat was on fire.
After Mr Janson saw the blaze, he filled a large pot with water and extinguished the fire in bin.
The house fire was concerning because neither flat had smoke alarms and it could have ended differently.
He hoped the incident would make his landlord consider installing smoke alarms in both flats.
Mr Janson said the policeman had seen a man acting suspiciously before entering and leaving the property.
After seeing flames, the policeman alerted residents and chased the man.
A police spokesman said a 45-year-old male was charged with arson and was in custody to appear in the Dunedin District Court today.
Police had investigated several suspicious fires in Dunedin in past months but as the matter was before the court, police declined to comment further on the case.
