"What are the gotchas if any?"
fire safety, we have a similar layout and were going to convert the
existing rear section into a utility room with exit into garden and up
stairs to ground floor.
the newly dug out section, under the living room, was going to be a
BCO told us it wasn't possible because there would only be 1 escape
route if a fire broke out in the utility room, however, we could have
them the other way round as the main escape route from the playroom
would be direct into the rear garden.
there are also issues with ventilation.
"Do I need planning permission?"
we were told no by the BCO and builder giving the quote
"Building control? "
"How should I proceed?"
contact the BCO with your drawn up plans and get him to come out, he'll
give you a lot of info and help (well ours did).