The Olive Street home – which has previously been the scene of several police raids – caught alight about 12.30am on Sunday.

Firefighters arrived about eight minutes later and spent two hours tackling the fire as thick smoke poured from the building.

The home, which had once operated as a takeaway shop, sustained damage to two bedrooms and an outdoor area.

Albury firefighter Dean Campbell said the resident appeared to have been undertaking work when the fire started.

“I believe the occupant was doing some work in the one of the bedrooms,” he said.

“He was using a heating lamp to dry some paint and the paint has caught alight.”

A nearby resident said he was woken by sirens as emergency services arrived.

“There wasn’t much happening to start off with and I went back to bed,” the man said.

“I got up again to have a look and there were firemen and police there.

“There wasn’t much smoke out the front but it was pouring out the back and through the roof.

“You could see flames licking around the eaves but it was mainly just smoke.”

The house had extensive smoke and water damage.

A rear section of the home partially collapsed onto the outdoor entertaining area.

A nearby car was also damaged by heat, with panels on the car having partially melted. 

According to online records, the home had been sold for $150,000 earlier this month.

Drugs and cash were found in the home during a raid in 2014 along with knuckledusters, pistols, phones and ice pipes. 

A man was badly bashed inside the home in 2009 before being put into an induced coma. 

Police had raided the home in July 2005 and removed a large amount of stolen property, including mobility scooters, white goods and VCRs. 

The blaze was the third serious house fire in Albury in the past 10 days. 

A Wyse Street unit was damaged when a wheat bag caught alight and set a bedroom on fire on July 21, causing extensive damage. 

A family of five ran from their burning Tulla Street home on the same day.