Had a very similar enquiry recently. I would go ahead and convert the box room into a bathroom. Then, when funds allow and if you have garden land, extend about 1m to the side so that the landing corridor can be extended into Bed 1 without loss of space to create stairs to a loft room to replace the lost 3rd bed. I would say do it even if you can't extend. A well planned upstairs bathroom will improve your quality of life and add value.

I have done something similar in my own property. I can replace the lost bedroom but in the meantime my new bathroom is a haven of comfort and tranquility. Amanda

Before and after ....

Yes, converting bedroom 3, or a part of it, seems like a good option if you plan properly for a future extension to re-add a bedroom. The soil pipe is already there with the WC, and extending the water lines up from the kitchen should be trivial. You might be able to keep the toilet where it is, just rotate it, close off the door, and open up into bed 3. Bed 3 would still have enough space for a hallway in case you can build on top of the ground-floor utility and bathroom.

Many flat owners squeeze a bathroom in between the two fireplaces (bed 1 and 2) to create another

bedroom. Be wary of making the second bedroom tso small for a double bed. I haven’t done this so do not know how easy this is to connect with the soil pipe.

If at a later date you plan to do a loft conversion (stairs above the current stairwell), and you can currently cope with two bedrooms, then bedroom three would make a lovely family bathroom