A new wastewater treatment plant in Northland has attracted a healthy government subsidy but ratepayers will stump up the balance of more than $13 million.

The Ministry of Health will give $7.3 million to the Far North District Council for a new sewerage treatment plant in Kerikeri that is expected to cost more than $20.5 million.

The current treatment plant is struggling to cope with demand and the council plans to dismantle it early to mid next year when the new one is expected to be up and running.

Properties connecting to the new system for the first time will pay a one-off connection fee of $734, an annual capital rate expected to be about $1000 and an operating levy of $523.

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The rates are for a single property with up to two toilets.

Each additional toilet pan will be charged at $643 in capital rate and $314 in operating rate per year.

Those connected to the current wastewater system are paying an annual capital rate of $484 and an additional $523 in operating rate.

The new treatment plant will have the capacity to treat 1000cu m of wastewater per day, nearly twice the capacity of the current plant.

It will cater for about 870 properties currently connected to the scheme, an additional 350 in central Kerikeri that at present rely on septic tanks, and a further 350 to 400 new houses in future.

The new plant can easily be expanded to treat a further 500cu m of wastewater that should allow between 800 and 820 additional properties to be connected.

As of yesterday, 317 homes and businesses had signed up to connect to the new system.

In 2015, the council estimated the new scheme would cost $20.5 million but an increase in building costs since mean that figure has gone up.

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"We aim to deliver the new plant and sewerage network so that costs to ratepayers are roughly what we estimated they would be when we first proposed the current project in 2015," Far North mayor John Carter said.

To gain final ministry approval, the council needed to show how the project would significantly improve sewage treatment in Kerikeri and cater for future growth. It said high-density housing zoned residential, commercial and industrial in town would be connected first before other areas.