I would suggest painting the wall, but I suspect with your split levels that it would be a mammoth job, so let's not be unrealistic! Staying with practicality, the lounge is near the kitchen, so it's going to need to stand up to some rough love from the kids (and dog?). Colour wise a lot of coastal/beachhead themes have pale lounges then incorporate the navy/yellow or Aqua/coral touches. That said you could still make those colour schemes work with navy if you don't want to get a new lounge. I'm thinking table in the corner, with a lamp, funky cushions and new vibrant artwork, maybe an ottoman or a couple of small ottomans pushed together. What colours do you like?

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not a professional just obsessed with building and renovating..bagging the fireplace wall would make it easy to fill in the old master bedroom doorway with bricks to make a seamless match for the whole wall and brighten the whole new room and a simple roof extension on legs at right angles to the house with a gable roof, simple steel framed construction with Colorbond and lazerlite roofing and raked ceilings would make an ideal alfresco but you would probably need a skylight in the new kitchen to keep indoors from being too dark (and/or check out Solar Skylights that are excellent for adding extra light without holes in the roof) ...the alfresco could have basic concrete slab extended out from the existing verandah, screen walls, outdoor fireplace and outdoor barbq kitchen and sink..we've done something similar in a previous reno using a custom sized steel carport supplied by a local garage maker and then adding screen walls with lazerlite, lattice and plastic cafe blinds subject to views and direction of the weather ... you should also consider bug screening using horticultural shade cloth as you may find rural living a bit more fly blown than the suburbs and the screened room makes a safe play area for small kids and for pets left home alone btw don't forget to check the measurements of all the rooms as there are some discrepancies that need to be corrected in the plans and would be happy to redraw with correct measurements

Agree with Kate. Walls are useful things. Do you use the sliding door out to the patio? Could this be bricked up, and the whole wall be dedicated to storage, fridge and oven. Plus an island for storage. Keeping sink in situ, due to cost of plumbing. Reduce the window size and install overhead cupboards either side. I would also install a window on the north side wall of lounge.