The firm obtained planning permission to build 32 flats and a semi-detached house on Abbotshall Road in August last year.

As part of the deal, Fife Council required the firm to ensure five of the proposed dwellings in the ex-council offices were affordable - either by way of mid-market rent or low-cost ownership - but would not provide any funding towards this, nor would any social landlord such as a housing association.

While they initially put up resistance, Mackay & Stenhouse relented and entered into a Section 75 agreement with Fife Council, making the affordable homes requirement legally binding.

However, in a new application to the council, the firm is seeking to instead pay Fife Council an affordable housing contribution of just under £32,000.

In total, the five flats were given an estimated market value of over £500,000 - more than 15 times the payment being offered.

Previous analysis suggests that Mackay & Stenhouse would need to sell the discounted flats at an average of 20% below their market value to have them qualify as “affordable” - and rising project costs made this “no longer viable”, according to an email between the firm and Fife Council planners.

In the exchange, Fife Council said the housing department would be willing to accept the £31,950 payment in lieu of affordable homes because of the difficulties associated with preparing the building for construction.

However, the request must be approved by council planning officers before it can be put in place, Fife Today reports.

A decision is expected before the end of March.

The new homes mark the continued development of the area with a new gym set now open on the site of former Norman Rollo car showroom, adjacent to it.

Forth House building dates back to 1860 and was a former linen weaving factory, built by the Jeffrey family.