He's after more than 1m2.... the fence is being adjusted for about 4m.
The neighbour is actually gaining land as well as area for the building which would increase his property even more than just the extension - in essence he's got a no lose situation going on his side.
He's going to be building right up against your conservatory, is it a glass side next to the fence because if it is you'll be seeing a lovely brick wall if that's built. Not to mention access issues if you need to do repairs or fix damage from him digging out the foundations.
He would need to come onto your side based on those drawings and my understanding of foundation regulations....seriously this could cause lots of damage to your conservatory and house if done wrong. Those plans have been 'very cleverly drawn by the architect' to avoid showing this to you and other people. Norm, it wasn't shown as it's quite a negative for it getting passed because most people would complain about it.
This photoshop below is more accurate representation of how the final build will affect you
The area is highlighted by the blue text and arrow shows where I'm referring to.
http://imgur.com/mxvBfH4
I'll be honest here and say I wouldn't be selling my land to him for that design, I have no idea why he needs that shower/toilet off the dining room when they have a perfectly good toilet under the stairs, there's also going to be two dining rooms... so what's the original one going to be used for... loud entertaining perhaps?.
The actual finished build would impact on your house quite severely, not just in terms of interference with your house, but sellability, maintenance and noise after it's built.
If you did decide to sell your land I wouldn't be going any less than 15k-20k based on those drawings, I was saying 5-10k earlier but that design will have a much bigger impact that you in implied.