Despite being a popular pet, sadly rabbits are often neglected just through lack of knowledge of their requirements. I’m sure your neighbour doesn’t mean to be cruel, talk to her and tell her your feelings. You can also get her to look at websites such as Rabbit Welfare for more information about good husbandry.
Enough space should always be provided to allow the rabbits to demonstrate natural behaviours; in the wild a rabbit will spend time running, leaping, jumping and twisting all of which are impossible within the confines of a small cage. Research has shown that the following diseases can be associated with improper housing and include osteoperosis, obesity, dermatitis, ulcers, respiratory problems, heart disease and fly strike. Ideally rabbits should live in a two-tier hutch (with sleeping quarters). The rabbits should be able to access a large grassy area from their hutch, but due to natural digging behaviour mesh should be used to prevent the rabbits from digging out. Wooden boltholes need to also be placed within the area so that the rabbit may hide when threatened. Look out posts can be placed within the enclosure and hollow logs, clay pipes and upturned clay flowerpots provide shade and alternative places to hide, play and explore. Hayracks will keep hay off the floor and encourage stretching. Fruit twigs, carrots dangling from ropes and areas of parsley and dandelion for feeding encourage a more natural feeding behaviour.