I think the problem there is that the local council decided to notify him about some damage to the house with a letter - so someone on the island isn't "in" on the whole conspiracy, otherwise, why even send him a letter. Or indeed, why not send a letter saying "yep, there's been a fire, we tried saving it but the house is gone".

That’d be Donegal County Council; the island doesn’t have its own one. Unlikely that the council had someone on the island; someone probably made a complaint about a derelict building to them.