It is a similar set up to my street the difference being that all the houses have the raised patio area so the fences are the same height on both sides and then slope down from patio height to garden height.
Trouble is with current set up is that even if you fork out for the largest fence permissable ( +/- 2.4 M ) He is gonna be completley overlooking you.
Your best outcome would be for him to build the max allowed fence hieght using his patio as the ground level, even then you will be left with a huge 3+ meter fence at the back of your seating area.
also I would be expecting him to pay for the fencing in this area.
Maybe massive hedge is your best option.