Police were called when the man, 38, was seen allegedly spreading an accelerant in front of his Guthridge Crescent property about midday.

Station Sergeant Harry Hains, who is officer-in-charge of Woden police station, said the man confronted police and made threats relating to himself and his property.

The threats prompted police to call firefighters and paramedics to ensure the man's safety, Sergeant Hains said.

Police negotiators failed to reason with the man and he set fire to the inside of his ground floor unit shortly before 3pm.

Emergency services crews were called to the three-unit housing complex in Guthridge Crescent shortly after 3pm.

Residents from the two upstairs units in the complex were evacuated.

The man was taken to the ACT Watch House and is expected to be charged with damaging property by fire.

Sergeant Hains would not comment on whether the man was known to police.

He could not confirm what type of accelerant was used to start the blaze.

The man was examined by paramedics and was not injured.

Sergeant Hains said the man's alleged actions could have sparked a "catastrophic explosion" or a deadly blaze, depending on what type of accelerant was used.

Police said there was no threat to public safety.

ACT Policing officers set up a crime scene and forensic investigators will examine the unit.

There was minor damage to the unit and firefighters were checking air pollution levels at the locked down property to determine when it would be safe for neighbours to return.