Trying to buy a property with neighbours extension on land

General Discussion

As the title says we are trying to buy a property with cash and the survey has flagged the neighbours extension is built on the land of the property we're trying to buy. Its probably half of a meter onto the land.

We could continue with the purchase but the solicitor has said we could encounter issues with mortgageability and saleability. We are planning on refinancing to pull our money out after refurbishing and last thing we want is all our money stuck in there because of this issue.

My question is has anyone experienced this before and have they had issue with putting a mortgage on a property or is this just one to walk away from? As we don't particularly care about the piece of land the neighbour built on years ago, is it possible to "sell" the land for a nominal fee to the neighbour and make the boundaries correct again? 

One other piece of information. The seller has deceased and there are no relatives so there is no one to ask about the history of this apart from the neighbour.