I think the idea would be to replace the existing buildings with taller ones, not literally had more storeys onto existing terraces.
Victorian terraces vary, but a lot of the ones I see have huge cracks up the side because they have almost no bloody foundations, just a foot of rubble or so at the bottom. They also have single-layer walls with no cavities, so you cannot insulate them except by adding weird cladding to the outside, which negates the whole point of maintaining an old "charming" building. Attempts to insulate Victorian terraces in various ways often result in damp/mould, which will get worse in the future if people try to add air con in the face of more heat waves. Most housing has a lifespan of 150 to 200 years; terraces built in the 1870s or whatever are therefore reaching the point where at most they only have a few decades left at the most. It is not worth trying to tie ourselves in knots retrofitting them IMO.
Accounts like Architectural Revival on Twitter have some good ideas for attractive but taller buildings which adapt traditional styles. If you adapted streets of terraces into streets which had a mixture of three-storey and four-storey terraces and some mid-rise blocks of flats (4-6 storeys), you could create tons of housing and the streets would look nice.
You would need to make hard decisions on transport and cars though, otherwise you will end up with hellish developments with cars jammed into every inch of the street, pavement and everywhere else, and everyone at each others' throats about traffic and parking.
It's possible to have terraces with offstreet parking (by having a gap under each of the houses that a car can be put into). However the risk is that you come back a decade later, and everyone has converted these garage areas into extra rooms or filled them with clutter and crap and then parks their car all over the street/pavement anyway. You'd need some firm local ordinances banning people from parking overnight on the street, and requiring people to get cars signed off by the powers that be before purchasing, checking that they have an off-street parking space for it and that their car fits their garage (we literally do this in Japan as a nationwide law!). And the roads will need to be wider to let people out in the morning.
Or, you can develop these developments as car-free neighborhoods if they are close enough to the center of town, but again, you'll have to be tough with people or they will just buy cars anyway and plonk them all over the neighborhood. And there will have to be serious serious work on public transport and active travel infrastructure to make it work.