We have a wet cellar. During heavy rain 2 to 3 inches of water lie on the floor and a damp smell filters up to the rooms above. This drains away after about a week. I got a price to turn it into a dry room all boarded out complete with sump pump. But its only 6ft high and the new floor would reduce that to about 5' 9" so only use as a store. The cost was £10,000.
We will be selling the house and anyone who smells the damp and sees a pump down there will surely walk away.There are other dry houses available.
Now I had the idea just to seal it off and create a good sized cupboard where the stairs go down to the cellar.But I wondered if there would be any issues. Then only this morning I spoke to one of the neighbours who told me they had the same problem and the council filled it in for them (in the eighties) and its been dry and smell free ever since. So I think you have guessed what I will be doing.