Moved from a lovely 2 bed flat in Ealing to a 3 bed Victorian mid terrace in Hitchin in North Herts on the train line into Kings Cross/Moorgate in 2011. I struggled to leave the city but our town is v lovely and unique for commuterville in that there is a lots on offer on our high street both for shopping and entertainment. That said, we've sold to move a little closer to a big city again. Moving 10 miles north of Brighton later this year. I love our house and the space but after 5 years I feel I need more than there is on offer here and once we leave this town, it's a 30 minute (usually more) drive minimum to get anywhere with more on offer. I'm a city girl through and through and though I can no longer afford to live in one, I need to be close to one. Space is great, but think of what you do with your spare time, though it's pretty fab for where we are, I feel I outgrew this town of 35,000 people in less than 5 years.

I can see potential for a 3-bed by turning the downstairs reception room into a bedroom but I don’t think you’d fit a third bedroom upstairs. You could consider turning the downstairs shower room, or part of it, into a utility / laundry space. Changing to 2 separate flats could be problematic in terms of access to the first floor one - presume you’d need a shared entrance which would make accessing the ground floor front reception room more difficult. Also, I don’t know if you’d need any special permissions, plus extra fire / safety regs to turn a house into 2 flats. It seems to be potentially a lot more hassle to take that option.

Is there a reason for a second bedroom? I ask as given your budget and the current increasing costs of materials might put a full extension out of budget. Given that,  I also note that your current combined kitchen lounge area is larger than the bedroom, so it may be more within budget to think about the layout of these 2 rooms. I see that the current bedroom has an attractive outside aspect. If the kitchen is reconfigured you might be able to achieve this from this room with double doors located next to the gate. If it is possible to knock through between kitchen and lounge you could achieve an open plan or almost open plan in this area with the outside aspect. Some food for thought.........

I'm stumped. Can't see how to do it well. So offering an alternative, though you probably already have this as a back up plan. How about dividing a room with furniture and curtains? Ikea do a sound absorbing curtain (mixed reviews) and googling "bunk bed room divider" finds some interesting images, also shows there are lots of people trying to give children their own space in a shared bedroom.