"Once you are inside it will be more modern but still sympathetic to the character of the home."
The restored villa will be connected via a glass corridor to the two-storey gable addition.
The lower level includes open-plan living with a master bedroom, walk-in wardrobe, en suite and office above.
Three bedrooms and a modern bathroom will be constructed in the existing villa with a television room and laundry in a lean-to space.
The front house and back addition will be linked by a central landscaped courtyard with a gas fire. Living areas will lead out through bi-fold doors to decking and back lawn.
The house is now being moved back on the site to make room for parking at the front.
"Carparking is at a premium in Grey Lynn so it was paramount to include double off-street carparking," Watson said.
The front yard will be landscaped to minimise the concrete driveway and will feature an electric gate and a traditional white picket fence.
The trio have started work on the cottage and hope to have the extensive renovation completed before Christmas.
The property had a 2011 valuation of $690,000, almost all of which was for its 381sq m of land.
It was valued last year at $1.03m.