It can't be illegal or else it would not be as easy as just giving someone your Wi-Fi password (PW) but why would you let your neighbour use your Wi-Fi?. If your neighbour is asking you to give them your Wi-Fi PW then they are asking for a free ride at your expense. If they are that sort of neighbour then what are they going to get up to whilst using your Wi-Fi? If they do anything illegal it gets traced back to you. Tell them to get their own Wi-Fi and if they can't afford it then do without.
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