A Waikaia holiday home was damaged after a Chinese-style lantern landed next to it and set it on fire.

A Chinese-style lantern that was let go at a wedding reception set fire to a holiday home in Southland at the weekend.

Waikaia fire chief Ross Sage said people at a wedding reception in the northern Southland town of Waikaia let lanterns float into the sky in the early hours of Sunday morning.

One landed next to the wall of a wooden villa used as a holiday home, setting it alight.

SUPPLIED A lantern lies in Leamington St, Waikaia, the morning after the fire.

"We had to strip the outside weather boards off and get into the wall cavity to stop it," Sage said.

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MYTCHALL BRANSGROVE/FAIRFAX NZ Releasing lanterns into the night sky is popular at weddings.

"It could have been a lot worse if it wasn't noticed by a neighbour - we could have been dealing with a total property loss or even a death."

The owner of the property fought the fire with two fire extinguishers before the volunteer fire brigade arrived.

"They were up but they were on the other side of the house and hadn't noticed it. It was only when the neighbour came over to say goodnight to them that the fire was noticed," Sage said.

"It was lucky they were still up. There was a smoke alarm in their bedroom but it had no batteries in it and that room was full of smoke."

Sage urged holiday home owners in the town to ensure their properties had working smoke alarms.

Waikaia was under a restricted fire season and conditions in the area were "very dry", he said.

"The people who let the lanterns go were totally stupid. There were three lanterns that I found so we could have been dealing with three different fires. The lanterns might be nice for them to watch but it has the potential for a loss of property."