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.

If the second bed doesn't need to be so big, swap the bathroom with the box room. You'd need to lose the utility but would keep a nice big kitchen. If the budget allows, you could widen that room to line up with the living room wall. That'd mean a new kitchen which may be a stretch too far but the symmetry might be pleasing!

@katlucy it's a good point - a window/door in the bedroom rear wall could be nice. yes - the door at the bottom of the stairs is a cellar. There is garden access from the kitchen only and a side gate. I suppose my greatest priority is creating a more cohesive living space, hence the thought to create a living/dining room and then make the bathroom a bit bigger with its own entrance off the newly extended hallway

No idea how easy it would be to move the kitchen to the rear bedroom, as both previous comments have indicated, but having the living/dining space next to the garden makes sense. The compromise is trying to squeeze in living/kitchen/dining into a relatively small space without extending into your side return. I really think you should explore the cost of an extension into your side return as it would make a big difference. If I’m correct, I noticed in Jonathan’s plan that the bathroom has been extended into the space where the back door was but if you kept its original size and simply moved it ‘down’ this would give you a little more living space.