Thanks all. The builders have already admitted in writing they made the mistake (misread the plans). I don't think knocking it down would suit either of us (there are a lot of steels in the roof which is vaulted that would all have to be refabricated and we don't want the disruption).
I think negotiating a discount is the way to go but based on floor area property values in our area it would be substantial - £15k of a £110k job.
Does anyone know if a builders insurance would cover this? Would it be absorbed in their profit margin? The problem is I like the guys and do feel it was a genuine mistake and would like them to finish the job but not sure on how much of a compromise we should make given that we will be out of pocket on resale and it has adversely affected how we will use the space.