The plaster underneath the paint won't be dry otherwise this paint would not be bubbling like this. Don't cover it up with paneling as this could cause additional work later. If it were mine I would try to identify the source and see if it could be easily removed- you show just one area on your pictures, assuming other parts of the house are not affected concentrate on trying to identify the cause there as the solution may not be as expensive as replacing all the render- it could be that the garden level and soil are too high outside the window and need digging out, it may be that the window cill does not protrude enough and collected rainwater is running down this part of the house. It might be a faulty gutter and rainwater is washing down the house rather than being piped away, there could be a leaking pipe washing water down the outside, or there could be a blocked drain outside the window and therefore standing water, or the render could have been cracked and a repair could be inexpensive compared to full replacement. It might still be rising damp but check it's not something else first. Eventually you will have to have the plaster off inside and the wall injected and replastered and the skirting and floor replaced. You should check at that time the water hasn't rotted joists but until you can afford that you can regularly scrape of the paint and repaint with an oil based paint which will still likely cost less than the wood paneling.

It’s probably not damp. It’s probably loose plaster. The picture shows some wall paper with some modern plaster stuck to it. I would bet that at some point the plasterwork wasn’t great, they patched the bad bits and then skimmed the lot. A few years later it needs doing again. Take off the lining paper and call a plasterer.

I know this post was a few years ago but just wanted to add my experience to the posts. My wardrobes are not actually on the wall, I suppose about 2 inches away from the outside wall and that wall is not damp. The wardrobes are floor to ceiling from IKEA (chipboard oak veneer) and so have airflow all around them. My clothes have had mould spots on them over the years and shoes soles have rotted. When I first noticed these incidents I bought things to soak up any moisture in the wardrobe but that got monotonous and didn't work 100per cent. Eventually we have drilled holes in the backs and bases of the wardrobes. I think this has helped to some extent but only time will tell. I think it could be what the wardrobes are made of as it has only happened since I have had this style. Also, something that seems to have made my ceiling/top of the wall black or damp along the top of my bedroom wall (similar to Zat's pic above) is that we had a ground floor disabled extension for my son over 10 years ago and it has a flat roof that I look out onto from my bedroom. Building Control or Surveyor when visiting the extension project at that time, told the builders to put these plastic oblong sheets all along the wall and above new extension roof as there's a gap between the wall and roof. In so doing, I think it has prevented airflow through the bricks that have those little gaps intermittently along the wall of the front of the house. This has been the question mark over the decade as to why we get these black marks at the top of the wall. I have 4 windows in that room also and always have them open for airflow and ventilation. I use a dehumidifier in there in the winter when it may be too cold to open all windows. My husband used the anti mould paint last year when he decorated our bedroom and painted over that. Six months later it was coming through again. Another issue I think that might contribute to all this. When we bought the house from new in 1983 off plan it was Timber framed. It was a lovely well insulated house, In 1990 we extended our bedroom and lounge. We couldn't find any builders in those days that knew about Timber framed extensions and so they just did their normal style work with brick. Nowadays we are more informed with all the programmes on TV and advice on computers and in hindsight we would have looked for a builder that did Timber framed. I have regretted it ever since really. The 1991 extension is the colder part of the house unfortunately and feels too cold in winter that I have a heater on the end walls of the lounge and bedroom. The disabled extension had better building regs to make sure the rooms didn't go below a certain temperature and they are fine. If I could have my house gutted I think I would have extra insulation fitted, underfloor heating and maybe other things that would once again make it a nice cosy home in the winter. But that is not going to happen! Hope this may be helpful to anyone for future use. All the best.

Hi Zi, Without a survey it is difficult to say if the paint would work for you in the same way as your neighbour. It may be that she has extra block work inside that acts as a barrier to any leaks which your side may not have. I understand why you would want to go for the more cost effective option, but best to get a damp survey to be sure and save paying for works that may fail in the short term. Tara Taylor Project Manager Essex and London Construction, Basements, Extensions and Loft Conversions Limited tara.taylor@essexandlondonconstruction.com www.essexandlondonconstruction.com