But CHL claims Leanne Bailey was "satisfied" to live with her daughter nearby - where she sleeps on the lounge room floor in a three-bedroom house with six others as a result of the fire.

The two parties have conflicting accounts of what occurred in the lead up to, and following, the house fire.

Ms Bailey had lived in the Ferntree Court house for 17 years adding six garden beds, two hot houses, a gazebo, improved flooring and an internal paint job to the property, which she said was in a "crappy" condition when she moved in.

She had requested a new house in November due to concerns with the alleged intimidating behaviour of neighbours. She was offered a property in Waverley which was deemed inappropriate due to her mental health condition, which was outlined by her doctor.

Ms Bailey was in the process of relocating her belongings as a result of heightened tensions when fire gutted her house on June 16 - the second house fire in the street in nine months.

Tasmania Police confirmed they were continuing to investigate the fire.

The house was demolished two days after the fire as it was deemed a safety hazard by Tasmania Fire Service.

Ms Bailey said she was not informed this would occur, resulting in the loss of her garden and belongings in the yard, but CHL claims it contacted her before the demolition occurred.

"I wouldn't have allowed them to do it if I hadn't had time to move the gazebo and relocate the garden beds, of course I didn't know it was going to happen," Ms Bailey said.

Ms Bailey lived in the house with her teenage grandson, and the pair have had to live with her daughter in a crowded house.

CHL offered her a rental unit in Perth, which CHL claimed was their property, but Ms Bailey said was private on a four-year lease. Ms Bailey said the property was inappropriate because she had to live in Launceston to remain within a short drive of her daughters due to her mental health conditions.

But when she turned the property down, she was informed that she was no longer considered CHL's responsibility.

Ms Bailey said it was disappointing that the organisation did not show more compassion.

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"Technically, I'm homeless now," she said.

"I was a good tenant for 17 years so it's upsetting to be treated like this."

CatholicCare has been attempting to co-ordinate short-term accommodation but with no success.

Her daughter Kassi McDonald said it was distressing to see her mother have nowhere to go.

"She's done everything right, she put value into the property. It's just not right," she said.

CHL state manager for Tasmania, Oscar Norton, said the organisation had discussed with Ms Bailey options to move into other properties, which were declined.

He said CHL had acted appropriately at all times.

"CHL also discussed with the tenant options to move into a CHL property in a different location on a continuing lease," he said.

"The resident declined this and was satisfied to remain with her daughter while her support services were assisting her to get emergency accommodation and expediting her application on the waiting list.

"On request by the resident, CHL provided support for her to access hotel accommodation for three nights at no cost."