What you have to consider is what affect it will have on the value of your house, and the affects it may have if you want to sell your house in the future. You should definitely consult a solicitor. Perhaps you could rent/lease the land to your neighbour.
To give you some idea as to what the land is worth.. what price would your property sell for? what does your building insurance say it would cost to rebuild your home? Take one away from the other and divide it by the area (square feet for example) to find a rough estimate of what your land is worth per square foot.