Anyone living in a small house with a small garden, working longs hours away from home buying a large dog that is going to be cooped up inside for most of its life - or worse, chained-up outside - is IMO totally irresponsible. It doesn't bode well for the safety of the public, nor for the health of the dog.
I don't know what good it will do but I would certainly share my concern with the Police or the RSPCA. And if she is renting from a housing association, they might need to know also. Of course, it's possible she's already cleared it with them.
She only lets it off the lead "if there's no one around"? As was said - how does she know who's coming round the corner, or out of their house at any given moment?
She sounds like just the type of person who should not have that kind of dog - or any dog come to that. Isn't the welfare of the animal important too? Should the creature be spending most hours of the day alone, unattended - only able to roam around a small house... or, possibly, even only a small part of it if she shuts it out of rooms other than the kitchen or sitting room?
Have you shared your concerns with other neighbours about this? I would.