Termites

Well - the restumping guy came for a quote and reported that the house is riddled with termite damage. 
However he couldn't see any evidence of any live termites. Funnily enough, I haven't seen a single creepy crawly whatsoever. (Not even bugs want to live there!) I should have known this, since I worked at a termite pest control company for 5 years- but I forget everything once I don't use it. 

As the house has sunk in the ground, and has been surrounded by concrete on all 4 sides, the moisture has been locked in for 120 years, thus attracting termites.
He has recommended that I pull all the floors up and remove all the concrete from the front verandah, side paths and back then get him back for a more thorough assessment. So I have my work cut out! Concrete cut out, whatever.

With new found light and ventilation in the house, there is no reason they'll come back.
He took a personal interest in the property as he lives around the corner - it has apparently been derelict for many years. I do wonder what the history of it is.. 

PS the other alternative is:
1. Insure the house for $200,000
2. Grafitti something offensive out front and accidentally leave the front door unlocked
3. Lodge arson claim for $200,000 (the cost of a new build house)