Provided that the utility room is not integrated into the heated area and the length of the boundary development does not exceed the legal requirements of 9m??, everything looks legitimate to me. The question is whether your terrace would have been allowed to be built so close to the boundary there. Were there not also distances required?
Legally, this probably cannot be a utility room at the border, but only a garage, which also cannot be used for domestic purposes. Ultimately, you only have two real alternatives. Either accept it or move in the medium term.