My garage sits right on the neighbour’s boundary. Does that cause problems?

It rarely stops a conversion, but it shapes the design. Building regulations pay close attention to walls within a metre of a boundary, expecting fire-resisting construction and limits on windows and doors in that elevation, and building control will want to see how that has been handled. If the wall is shared, or excavation happens close to it, the Party Wall etc. Act can also apply. We raise all of this at survey stage so the layout is planned around it instead of being redrawn halfway through.