Good theories, but I was always under the assumption (according to the other neighbours) that it was this neighbour delaying the LFO in order to achieve some sort of compensation for his property being smaller..
It appeared that he was delaying the while thing in order to force the developers into a large compensation. The developers gave us the impression they were fighting for the LFO to be issued (which would only, as Maria says. strengthen his hold over the property)…why would they do that, if he is living there illegally. It doesn’t make any sense at all really. But I am positive that HE is very clever and knows exactly what he is doing.