Wells up with old soak outside — this place is disgraceful (8)
I believe the answer is:
doghouse
'this place is disgraceful' is the definition.
'wells up with old soak outside' is the wordplay.
'wells' becomes 'hg' (HG Wells).
'up' says the letters should be written backwards (in down clue: letters go upwards).
'with old' becomes 'o' (common abbreviation eg in OE for Old English. I am not sure about the 'with' bit.**).
'soak' becomes 'douse' ('douse' can be a synonym of 'soak').
'outside' is an insertion indicator.
'hg' back-to-front is 'gh'.
'gh'+'o'='gho'
'gho' put into 'douse' is 'DOGHOUSE'.
(Other definitions for doghouse that I've seen before include "Location of disfavour - kennel" , "disgraceful environment" , "Place for one in disfavour" , "A disgraceful thing" , "Kennel - home to a disgraced resident?" .)