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Glamis Hospital in Mornington has repeatedly been targeted by vandals, arsonists, trespassers and squatters since it was left vacant at least four years ago.
Pressure has been mounting on the Dunedin City Council to do something about the extensively damaged building.
Last week Glamis neighbour Grant Meikle sent the council a letter asking for the building to be classified as dangerous under the Building Act.
The council has said under the Act the building is not considered dangerous, but it had contacted the owner suggesting actions he could take to secure the site, including demolishing the building.
Owned by Malaysian businessman Leng Seak Loke, the 60-year old building has not been occupied since his daughter moved out more than four years ago.
Neighbours said initially Mr Loke had kept in constant contact with them about his plans but recently he had been harder to communicate with.
A representative of Mr Loke rejected the claim the building had been abandoned and told the Otago Daily Times he had been in contact with residents as recently as last weekend.
Health and legal issues had meant he had returned to Malaysia but he was seeking advice from his doctor and obtaining a visa so he could return to New Zealand.
Plans to renovate the building and run a business from it had been dashed by the fires, he said.
When he returned, the building would be assessed and a decision on its future would be made.
Council building solutions principal adviser Neil McLeod said he fully understood and shared concerns about the building but there was no regulatory action available.
As it was unoccupied and there was no danger to the public unless they chose to trespass, the building did not meet the criteria to be considered dangerous under the Building Act.
The potential for an act of arson did not render a building dangerous and trespassing, arson and vandalism were matters for police, he said.
While the council could not compel Mr Loke to do anything, it had suggested actions he could take to secure the property, which included repair, barricading the property and demolition.
A list of local contractors who could potentially undertake security work was also provided to Mr Loke.