Shed too close to wall?

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I was wondering if anyone could give me some advice regarding the situation I have now found myself in. I bought my house in January and in the survey it stated there was some damp on one of the walls in the living room. After settling in my wife and I decided the get a damp course done to treat the wall. This was done approx 3 months ago at the cost of nearly £1000, though we were given a 25 year guarantee.
A month after that was completed we decided to get a decorator in to redecorate the house. When he started to paint the wall that was treated the paint started to congeal and he advised us that the wall was damp again. We called the damp engineers out and they inspected the wall to confirm it was damp. The wall is an external wall and they looked round the back to see what could be causing the problem and they noticed a shed that has been built by our neighbours at the back of the house which is less than a foot away from our wall. The engineer stated that the shed was causing the damp and the guarantee will not cover this.
We have spoken to our neighbour who has stated that the previous owner of our house stated there was a damp problem, and our damp situation has got nothing to do with her shed. After spending quite a lot of money and with no resolution in sight I was wondering if anyone could shed any light on this. Sorry for the length of this OP.
Chris
A month after that was completed we decided to get a decorator in to redecorate the house. When he started to paint the wall that was treated the paint started to congeal and he advised us that the wall was damp again. We called the damp engineers out and they inspected the wall to confirm it was damp. The wall is an external wall and they looked round the back to see what could be causing the problem and they noticed a shed that has been built by our neighbours at the back of the house which is less than a foot away from our wall. The engineer stated that the shed was causing the damp and the guarantee will not cover this.
We have spoken to our neighbour who has stated that the previous owner of our house stated there was a damp problem, and our damp situation has got nothing to do with her shed. After spending quite a lot of money and with no resolution in sight I was wondering if anyone could shed any light on this. Sorry for the length of this OP.
Chris
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1ft / 12in / 30cm doesn't sound too unreasonable, unless rain water from the roof is able to drip on to the wall.
Do I need building regulations approval to build a detached garage?
Yes, however a single storey garage at ground level, under 30sq.m. in floor area and with no sleeping accommodation, is exempt, provided it is built substantially of non-combustible material or when built it has a clear space of 1 metre from the boundary of the property.
This would apply to the shed would it not?