It has always been accepted that this is the case although I think as the years have passed less so.
The difficulty you have is that you have no legal cause of action.
By this I mean that you do not have a contract with the council so they cannot be in breach of contract.
In the absence of a contract you will have to rely of a duty in tort or statute.
Certain duties in tort are well established road user to road user as an example but there is not one in relation to building council properties next to private ones it would be unfeasible and unpalatable to judges.
This leaves a statutory duty and again whilst compensation can be claimed for major development a house or houses would not qualify.
I apologise for being the bearer of bad news. If there are any further points please respond I will be happy to reply.
Kindly rate my answer before leaving the site so that I get credit for my time albeit that I could not provide a positive answer in this situation.