How about building a house in the northeast corner of the house occupied by the neighbor?

Not so good. It is illegal for neighbors to occupy their homestead without the approval of government departments. As a party whose interests have been infringed, it should collect relevant evidence of neighbors' occupation of their own land in time. After collecting the evidence, you can mediate privately with your neighbors and negotiate a compensation plan. If the mediation is unsuccessful, you can ask the local village Committee to help negotiate.