Heating and cooling: I suggest insulation is a necessity. We have a log fire in our lounge room, but one has to sit quite close to it to get any benefit from it. I usually have a throw rug, plus a cat on my lap, and often one next to me. The heat rises , so your upstairs area will often be toasty warm, but the downstairs area will be cold. In Sydney, depending on if you are coastal or further inland, it may or may not be a problem. Consider something like underfloor heating, perhaps? That is what we are going to look at when we renovate. Or, you could try a ceiling fan which is designed to blow the warm air down - depending on the size of your void, you may need more than one. I have a fan, but I am not convinced it does much.

You are most welcome, I have always said that I haven't been put on this earth to "Hug" toilets, so I'am wondering who is going to clean all of these Bathrooms. Our two kids a boy and a girl had the upstairs "apartment" which they and all their friends loved. I have added a timber stair case for fun, there's plenty of space but you will need to decide what you want to do in the attic and place the stairs to open up into a tall space. I have also turned one of the ensuites into a powder room. Your Jacaranda's only drop once a year!, you used to be able to trim them by 25% each year, you would need to check with your council, we were on the lower North Shore, I think you should consider the patio side of the house and make better use of that, is the front deck something you plan on adding because of aspect, and plant some tall growing hedge ready for the apartments. Our kids Attic desk/study space over looked our pool in the rear garden. With respect to using the formal rooms for bedrooms, you will find that once you have your large family/alfresco and the kids have their upstairs space if you still feel you need it, it would make a great office. You spend most of the time there only using only using the front room in the evening for watching movies etc. I have had another play with my floor plan, I think if your wife sees this you may be in trouble, it's a Master Suite, the free standing bath in the window alcove with white timber shutters for sun and privacy control..... Iam' adding a couple of photos of our old Federation which wasn't protected, when we sold it the new owners removed all of the Fret work & posts replacing them with simple timber posts. The front rooms which we didn't use very much once we opened up the rear rooms into a family area. The room with the Bay window had a Baby grand sitting there, we sold the piano before we took the photo. Cheers

These drawings are not to scale so may not work, but this is what I would be striving for if it were my house. Retain the 3-way bathroom but move the shower to a lovely large open shower and add a toilet opening off the laundry. It reduces the laundry size, but I would rather a second toilet over a larger laundry any day. And this shouldn't be a hideously expensive remodel as it leaves much of the existing in place. The biggest issue would be plumbing for the new toilet. You could eliminate the basin in the second toilet if you designed the laundry so that the wash tub doubles as a hand basin. I've seen that done in ways that are quite attractive. (Apologies for the rather rough drawings).

Someone earlier in this discussion said "embrace the architecture" and I agree. Changing the architecture is expensive, especially squaring off arches. Arches are typically associated with Mediterranean architecture and love or loath em, arches are pushing back into modern day architecture. So go with it by removing the concrete balustrade and build more arches to match those below. Bag and paint the brickwork with a Porters limewash paint to obtain that authentic Mediterranean and uneven look. Consider semi-circular balustrading for that Romeo and Juliet look or better still add semi-circular concrete planter boxes for added privacy. They can then be planted with low growing and trailing plants such as a variegated ivy. The head s of the top arches only can then be topped with a timber batten screen which will soften the facade further and you will have a modern 2023 take on Mediterranean Modern. Keep that going throughout the house to give it a full and complete reno. Think 3D as your home has 4 facades not just 1. I see all too often homes where the owner renovates the street elevation and just paints the rest of the home. It looks as if the home has had a full size photo glued onto the street elevation. Even the fake stone stops at the corner and the whole facade looks as if it will just peel off with the next rain. I've attached an image of a new development near my studio on the Gold Coast which give you an idea. It's not exactly what I have suggested but it does demonstrate the use of arches in a modern architectural setting with the use of timber and trailing plants.