Fife Council is to knock down four blocks of flats as fewer than half of them are in use.
At the North East area committee, councillors agreed to demolish the Mayview premises in Anstruther.
The flats, which are in a run down condition, are only currently half full.
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The cost of refurbishing them was put at more than £4m, while tearing them down would cost £2m.
At the committee, councillors were told that offers to relocate to homes in the flat were regularly turned down.
Only 18 of the council owned 40 flats are let. Anyone who owns a flat in the blocks will be offered the market value for their property, which is estimated at around £100,000.
Residents will be offered one of the new council homes to rent.
There are plans to build new council homes on the site.
Other options included refubishing one block while demolishing the others or refurbishing all blocks.
Local councillor Linda Holt welcomed the decision, but added: “The people who have bought houses will lose out here, as they won’t be able to afford another home in Anstruther, and that’s why they’re unhappy.
“We’re not allowed to offer and can’t give them a replacement house.
“And there are people who are proud and pleased to own their own home.
“They’re now being told they’ve got to enter a council house if they want to stay in the area – people who might have paid off their mortgage, will now have to go back to paying rent. They are getting a raw deal and we need to acknowledge that. It’s very regrettable.”
Councillor Bill Porteous raised concerns over the management of the flats for a number of years that lead them to fall into disrepair. He asked for a report to be brought back to council on how they got into this situation in the first place.
He said: “There needs to be a review on the basis of estate management, and around issues surrounding a lack of consultation with the tenants and a failure to address repairs. The fact that we have a waiting list of people waiting to be homed, who won’t accept these because of their condition is unbelievable.”
The council agreed to have a review into the management of the flats, but also agreed to go ahead with the demolition.