Jamie Oliver wants to do it this summer. Tony Blair has already done it. So have television presenter Michael Palin and actress Helena Bonham-Carter.

The "it" in question is perhaps the ultimate way of creating more space at home without actually moving: purchasing the house next door and knocking through.

The reasons are obvious when a housing market is characterised by falling values and a shortage of stock for sale – knocking through allows more space than an extension without having to incur moving costs, leave the neighbourhood or disrupt school arrangements.

Even if you are lucky enough to have neighbours vacating their home at the right time, the option is neither cheap nor simple.

"You can knock through almost any age or style of property so long as they're adjoining, but there's so much more to it than just using a hammer to demolish the dividing wall," warns Tim Doherty of Buildstore, a building support service.

He emphasises that you need to budget for redesigning the entire "double'' interior almost from scratch to ensure you avoid too many small rooms better suited to the two individual homes than a larger property. "If you don't take a holistic approach, you can have too many small bathrooms or botched things like three doors leading to one room," he warns.

Doherty says it is vital that the end result "looks right in the street" to avoid the conjoined house simply looking ugly – and thus making it harder to sell in the future.

These warnings were taken on board by Jo and Bill Smith, in their fifties, who live in a 120-year-old miner's cottage near Wrexham. Two years ago they decided they needed more space but wanted to avoid leaving the community they loved. So when the house next door went on sale they paid £180,000 and decided to make two into one.

The Smiths used architects to design the knock through and a rear extension running across both houses but are doing the building work themselves in their spare time, despite holding demanding jobs as a care worker and garage owner.

"A larger home makes it more worthwhile fitting environmentally friendly features so we're having oak frames, a bore hole, sustainable materials and so on. We're even changing the roof to make it one stretching over the whole house rather than two separate ones," says Jo.

So far the Smiths have spent a hefty £150,000 and hope to complete the work next year. At one time they used a caravan parked nearby as a kitchen when the work was at its most disruptive. Given the downturn the couple know that they will struggle to recoup their spending in the short term, or possibly at all. "The market has conspired against us but we're doing this because it gives us a bigger living space, not for money," Jo says.

Knocking through works with newbuild homes, too, as Sir Stephen and Lady Barratt will tell you.

The former UK ambassador to Poland bought a two-bedroom apartment with his wife at the Denham Garden Village in Sussex, a retirement community run by the Anchor Trust. When they found it too small for their book collection and friends, they bought the flat next door.

"We've simply removed the wall in between. We have otherwise kept each apartment as it was to allow visitors to have their own bathroom and kitchen and so on. It works absolutely perfectly," he says.

But although knocking through sounds an ideal solution to a space shortage, there are potential problems.

"There's a risk of overdevelopment. A street or suburb is known for a certain type of home at a certain price. If yours is twice the size it may take longer to sell and buyers may be resistant to your asking price," says Charles Pole, a surveyor who works in Wiltshire and London.

"Secondly, you have to ensure work strictly adheres to planning and building regulations [see box]to ensure you can sell smoothly at a later date. Buyers' solicitors are more diligent than ever seeking evidence that major work has been completed properly. Short cuts will come back to haunt you when you want to sell," he warns.

Jamie Oliver's application to integrate his home with a neighbouring one will create a 19-room palace in London's uber-trendy Primrose Hill, if Camden council planners back the proposal in July.

It seems straightforward enough – the end result will include his and her bathrooms, a vast open-plan ground floor and an extension at the back of the two houses – and, as Oliver is reported to be worth £40m, we can expect a top-quality conversion. But not all celebrities are successful at persuading planners to come around to their way of thinking.

"Of course, it is essential to ensure that you will get planning permission before you buy the place next door. Get other neighbours on side and meet planners with your architects' plans before you buy, otherwise there's an outside chance you may have a problem," advises Pole.

He's right. In 2007, planners barred Madonna from knocking through two adjoining houses at Great Cumberland Place in London's Marylebone. The result? She has to walk 20 yards along the street when she wants to go from one part of her home to another.

• If you knock through and remodel the entire interior of the two houses, the end result must abide by Building Regulations including fire safety, type of glass, energy efficiency, insulation and disability access.
• You cannot guarantee to double your effective floor space because some planners insist you keep key elements in both houses such as major staircases or period features.
• Your completed property will be reclassified as one home. Its council tax band will probably be higher than that applied to either smaller house before knocking through but (MPs please note) any profit from the sale of the integrated property will not be eligible for capital gains tax so long as it is your principal home.