Op, sorry to ask but can I just clarify that you own your flat-you have bought it, you are not renting?
I have to ask this as I'm a little bit baffled that you are not sure whether you are a leaseholder or have share of freehold. This should have been made very clear to you when you were purchasing the property, at the very least by your solicitor.
I used to own a flat in England, so the rules might be different for you, but mine was share of freehold. This meant that all of the owners of the flats in the building (who all had share of freehold) had regular meetings to discuss any issues in the building.
While I was there, the whole of the outside of the building was painted, but that was discussed in advance, which included the discussion of quotes.
We all paid a monthly maintenance fee to a management company who would arrange the work that we as shared freeholders would have agreed upon. The fee covered buildings insurance and maintenance to the building, along with lighting and heating in the shared areas I believe.
Part of the money that we paid, was going towards future repairs, which is known as a 'sinking fund', mainly for the roof, which didn't need repairing while I was there, but it had to be paid towards, because that covers all eventualities and helps you to sleep at night!
You definitely need to ascertain what you are responsible for. Either way, I'm very sure that your neighbour should have had a meeting with all of you, found at least three quotes from decorators and then received permission from the other owners before going ahead.
Although this is a big deal because of your budget, this situation is revealing an even bigger deal if your roof caves in and there is no sinking fund to cover it!
Double check your deeds again. If you find you all have a share of freehold, then you don't have to employ a management company, you can agree an 'as and when' situation with your neighbours, but this runs the risk of there being no money for larger jobs if anything major happens.
I would in this situation check my deeds, if I'm still unsure, speak to a solicitor.
Either way, perhaps a note through all your neighbour's doors from you for a meeting would be good once you've found out your leasehold/freehold status.
I would recommend an organised written agenda including:
A) clarification of leasehold/freehold status
B) your responsibilities
C) how you wish to proceed: either 'as and when' or maintenance company
D) a discussion and vote about your new neighbour's decoration and demand for money. The above previous points will have helped you all reach a decision as to how you should handle that. E.g. this was not discussed or voted upon so cheeky neighbour will have to cover the costs themselves
E) making it crystal clear from that point onwards all future maintenance will be discussed and voted upon before any action taken.
Hope some of that helps and best of luck, either way I think your new neighbour is a cheeky fecker and is trying to make a few bob out of you all as they probably painted it themselves!