The Data Protection Act (which covers the use of CCTV cameras in commercial situations) doesn't apply to domestic use, so the only laws which apply are those which normally relate to still and video photography:
With very limited exceptions (which are covered by legislation as diverse as the Official Secrets Act and the Sexual Offenders Act) anyone who is on the public highway, on their own property, or on property where they have permission to take photographs, can photograph who or what they like, irrespective of the location of the person, object or activity being photographed.
I've taken hundreds of thousands of photographs, both for press use and for personal use. Many of these have been taken when people might not have liked it (e.g. from a public footpath, through a window of their house) but they've all been perfectly legal.
There's nothing you can do about your nosey neighbour except, of course, point a load of cameras at his house ;-)
Chris