Invest in a statement floor lamp to sit in corner behind sofa.

It all has 70's/80's vibes to me , including the rug , couch , curtains etc . To go too modern won't quite work IMO -- I imagine that white side table in a reasonably deep blue ( similar to the two cushions , maybe a bit darker ) would be about as modern as you'd want to be .

Wood is warm , but with the brown brick it may look even older in period to have a coffee table or similar , or a lamp with a wooden stand , so maybe go polished stainless for a table and a lamp -- that would have been ultra-modern back then , and still looks good now , or like I said , maybe a deepish blue . White ( as you can see from the table etc ) doesn't work with distressed look of the rug , while greens , reds , oranges , even black don't feel right to me . Maybe a splash of yellow ( see how that Tonka toy stands out ! ) but you are sort of stuck with blues otherwise .

If you are keeping the blue rug, try a coffee table with an ottoman, an oval one will fit also, large beautiful cushions for the couch and look for a fabulous statement lamp.

Are you after a unit for your shoes, is that what you are after.

If the carpet is in good condition I would remove the floor rug which will declutter the space and update it, the new lounge is perfect for that space, as mentioned above a round coffee table (better with kids). Replace the round coffee table with a soft storage box for the toys

I definitely don't want 70/80s vibe. I got the rug to try modernize the space. How did I do the opposite oh dear.

Your rug is lovely,, you mention you were planning to keep timber flooring for dining and carpet in sunken lounge which is great. If you want to modernize a plain carpet with your leather lounge will certainly do that. It is only a suggestion but it is your house and you must do what you like and suits you

I like rug and the sofa was a good score. Your cushions need work - have a look at Walter G for combination inspiration. If you have the budget have a tall cabinet built on the wall where the toys are piled up. Remove any other small pieces of furniture, rethink the mantle decor and add a coffee table. Because of the bulk of the sofa you’ll need a coffee table with heft, which will be a balancing act because the sofa is a tad large.

Looking at my mood board it's very neutrals with pops of colour. Is it the rug or fireplace or both that don't work? Or should I just buy a more modern sofa?

I like the couch , its obviously good quality and its neutral . Its not modern but it's not 'classically old' either . But the brown bricks ( and to a certain degree the net curtains and the rug etc ) date things . I'm not a fan of painting or bagging bricks , but in this case I think it would work . Bagging looks more distressed , and would tie in with the rug better , but a crisp white paint would help modernise the look too .

Maybe some inspiration ?

It’s hard getting it right and it can be disheartening, but going by your mood board you are after a neutral space, you could go with a lighter rug under your couch, bring in soft colours with cushions and throws, you could add a buffet for toys, re think the fireplace mantle and add a few precious pieces, keep it simple and beautiful. It’s just a matter of careful planning and choosing pieces that work in the space..

I also thought it looked dated…..but, working with the great lounge, because anything that is that good and free needs to be kept. I would keep the navy blue cushions and the blue patterned one. If the other cushions are required, get covers for them in blue as well. If your up to it, I think to white wash the brick work will definitely modernise the room. You can’t add anymore furniture or coffee table if it is a play room also. The children need to play on the rug with their trucks, not in the walkways. I would purchase some large round rattan baskets to put all the toys in. Get them off the fireplace. Put them in the far corner out of the way when not used. When the children are older, evolve the space with coffee tables and buffets.

And yes, get a shoe cabinet to hide all those shoes.

Wild suggestion…swap the dining and lounge room floor rugs over. The dining rug is a complimentary colour to the lounge room And the large lounge floor rug will cover the orange floor in the dining room. Replace the dining pendant with a light coloured pendant.

Do you ever pull the darker curtains fully across the windows?. I suggest to take them down and see the difference without them. If you do need the privacy, then….If removing the dark curtains looks good, then maybe look at purchasing white roller blinds for windows, with the sheers in front. Place the sheer curtain track, higher, closer to the cornice.

Also, put your plant on the round metal table back into the corner behind the lounge.

Fabulous ideas dreamer, especially the rug and blinds.

The rooms you have shown have a Mid Century Modern look with the exposed brick wall and different floor levels between the lounge dining. While the kids are little keep it simple with a space to stow the toys except the railway tracks. A couple of square bean bags that can be stacked to form a coffee table to take tray for when they are in bed.

I think the rug is too big and too bold. As I said earlier a statement lamp with a similar shade to dining room light would tie in the spaces. A friend recently tiled her brick fireplace and it has brought her lounge room forward several decades. I’m not sure your room is wide enough for a round coffee table, or any. What is the width between fireplace and sofa?

Have you tried moving the sofa further towards the entrance and more opposite the fireplace to give balance to the room, this will also give you another space in front of the end window for toys or a sofa table with a lamp behind the chaise part of the lounge

Perhaps something along these lines

Thanks @siriuskey! ive cleaned up a bit and im washing the sheers today so this is what im currently working with. incase that adds inspo!

@Kate Anderson 190cm currently between edge of fireplace and start of sofa

@Kate Anderson i have have considered hiring someone to render, tile or paint the fireplace. its so big though and double sided, so I assumed it would be very expensive.

Nothing wrong with sheer curtains they offer privacy during the day. Would it be too much try moving the lounge, I can see from the new photos that you have lined the sofa up with the wood storage so it could work to come forward. The fire screen in front of the wood storage would be better removed to add more depth between it and the sofa unless you are using it to keep the kids out. You could look at adding an arm chair at the entrance end of the room.

I think dreamer mentioned swapping the rugs, I agree that if you were to use a rug the one under the dining table would look beautiful with your lounge placed longways up to the front of the lounge. The larger blue rug would also be a better fit for the dining setting, it would allow to have a carver (the black chair) at the end. something more to consider.

Katrina, that looks great, have you considered dreamers idea of switching the rugs, it could look great with your sofa, we had our brick fireplace rendered and it made a huge difference , but plasterboard could work just as well and be cheaper and less maintenance.

The plant looks good back in the corner 😀

I think your brick fireplace is lovely, it keeps the character from the period of your house, Your Bunny print could have another larger print along side it, something simple

@siriuskey by Bunny print do you mean the Kookaburra? :)

The reason for the rugs is this. The rug under the dining table is a low pile, washable, outdoor rug. It's there so if the kids drop food it is easily cleaned. The big blue rug is thick and plush. It could still be swapped but that is why I had them where I did.

Okay let’s go back to the very first photo. That colour lounge worked, but too small for space. Sooooo, leave your floor rugs where they are, and leave brick as is, get some huge sofa throw rugs in the same colour as the old lounge and cover your cream lounge. Then have your blue cushions, baskets for toys. The lounge is a good piece, but causing the mismatch, so instead of changing everything else, change the colour of the lounge.

@siriuskey sofa more forward like this??

Sorry katrina I had the bunny print in our kids room, you have the kookaburra both are lovely

I think that is better than having everything pushed to the walls. This also makes a cubby house space for the kids

Big job to swap the floor rugs, I personally don't think the blue rug works with the grey carpet and the lounge, it's too strong

I would swap them as long as the beige carpet sits ok on the carpet, and not being plush will work as it won't cover as much floor as the blue

Can you make use of the blue rug elsewhere.

I understand the feeling about your blue rug that you bought it for that area and it is lovely, but since getting gifted your great sofa it doesn’t really sit right, it throws the whole look off, I know you don’t want to move it but the cream one would look great, maybe you don’t need a rug under your table, are you able to use it in your bedroom , I know you bought it for your lounge but going neutral will fit in with the fireplace and sofa without changing much at all, then you could add colours that will draw the room together.

This might help, very basic, and perhaps not have anything under the dining table

Perfect siriuskey .

I love the rug prob the best thing in the room but it will needs help to work. Your original sofa colour worked because it had cousins in the room, in the colours of the curtains and carpet. The new modular is workable because it has a cousin in the colour of the walls but could do with more family. Everything needs a relation in the room. At the moment the blue rug is an orphan. You need to increase the blue or move it. In terms of your fireplace, painting it is an easy diy option, you can get render look paint. I like the texture of the bricks but it is visually very imposing.

Looks better.

Looks much better.

now there is space for a coffee table, some kind of floor lamp, and I better put that plant back somewhere!!

I know its not hidden but ive tried to tidy

up the toy area

I like the snuggle chair. It was what I meant about relationships. And is the a cat approving also. The proportions fit the room better also.

Great work. That modula is much better suited in the tiled room. It is proportional to the wall cabinets

And. Love the blue snuggle chair. What a find

Well done, I had a feeling you had a second living area, it looks like you have achieved what you wanted for your lovely room and house. Enjoy