Depends really, couldn’t say without seeing it.
Should I take it then from what you are saying, is that BT sell the installation without really knowing, and the engineers choose how they do it.
Does the installation need to be next to the phone socket?
On a Standard Installation yes, ideally the Fibre Cable should follow the same route and the Copper and the ONT be installed next to or as close as possible to the existing NTE. Obviously the ONT needs a mains power supply so if there’s not one available by the existing NTE then it should be installed next to the nearest mains socket.
Thats even more weird then as there is no power supply in the room next to the phone socket.
Do you think it could be that the engineer doesn't realise that the bungalow has been converted, so assumes it means going into the loft?
What’s the room next to the one with the NTE got to do with anything?
Ah right, he means next to it. If he’d bothered to read what I wrote twice I said next to or as close as possible.