Hi there and thank you for your question,
I will try to assist you with your legal question but please feel free to ask as many follow up questions as you like until you are 100% satisfied.
If your neighbour has agreed that the wall is in the incorrect place, then you're on good legal grounds since your neighbour can't claim ownership of that piece of 0.5m land anymore.
What will need to happen is that your neighbour will need to MOVE the wall so that it is on the boundary line.
If your neighbour put the wall up initially, then he must bear the costs of moving it to the right place. But if the previous owner put up the wall, then he would need to bear the costs.
Your best and quickest route is to share the costs of moving the wall between yourself and your neighbour so that you can finish your building, then do some research into the previous owners and try work out whose fault it was. Then, you would need to claim against them - but the crux is that they would have needed to know that the wall was being put in the wrong place, otherwise they would not be liable.
Maybe it was the original developers who put the wall in the wrong place - in which case your claim would be against them!
If my answer hasn't answered all of your questions, please send me a REPLY with follow up questions so that I can continue to assist you in this same thread for as long as you need. Let me know if you need more advice - dont just rate my answer as "bad".
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Good luck and best regards,