Dear Vishwanath
In my view you can retain the old connection but you have to take premission for making new house. It is advisable that you should take information from the municiplity of your city.
There are many posiblity in demolition such as
i Do with your labor and reuse old bricks, brick bats and other usable material.
ii. Alot the work to any demolisher and retain the usable materials.
iii. Alot the work of demolishing and materials to be taken by the contractor