I would put both children in bigger bedroom to share.
You and dh move into small box room which can be a small double mattress squeezed in if needed. Make custom bed frame from simple wooden cubes so a)its a bit higher, b) underneath storage. Pinterest ideas.
I wouldn't want to be in living room, as then your all stuck if one of you is tired early or ill. If say you are ready to sleep at 9pm, surely 13/14/15 year old would then prefer to stay up and use living room, than forced into bedroom. And you and your dh will often want to sleep earlier than the other for whatever reason. Plus one of you can still have a lie in then, whilst other adult gets up with children.
Some ideas that might help:
- buy decent wireless headphones for teenager. They can then watch things, or listen to music in shared bedroom or shared living room with disturbing younger.
- allow teenager to use your bed in boxroom to chill if younger is asleep or younger has friends over.
- playhouse in garden for some of 5 year olds toys.
Its not perfect, but life changes. Right now you can just talk to whole family explaining situation. Teenager will have to understand that due to all of this, paths change and maybe between you all you can come up with ideas to help to all live together in small ish space.
A small 2 bed house, for 4 people is as you say, cramped at times. But lots will have it far worse, in much worse housing etc.