I wonder on what basis any of the above persons are making their assertions? Do they not realise that the Building Control Officer's job is to know the regulations, so if he says a disabled loo is required, it is very likely to be true.
They could check the Building Regulations documents to check before scribbling an answer. Did they do that? - apparently not.
Part M of Building Control Regulations is about disabled access. What it says is that the requirement will be satisfied if a WC is provided in the entrance storey of a dwelling which contains a habitable room; or (where the dwelling is such that there are no habitable rooms in the entrance storey) if a WC is provided in either the entrance storey or the principal storey.
In short, it means one HAS to have a downstairs loo in a new 2 storey conventional dwelling. This regulations has been around since 2004.
Now you say this person is 'doing up' an older house. If the house is already a domestic dwelling and already has planning consent to be used as a dwelling, there should be no problem - you do not now need to add a new loo downstairs if there isn't one there already. But if the 'doing up' involves splitting an existing house into flats, or a change of use where (say) it was a retail shop before and it is being converted to a dwelling house, then yes it does.