In 1852 the Constitution Act enabled the General Assembly of New Zealand to make laws regulating the sale, disposal, and occupation of Crown land and authorised the division of New Zealand into provinces. By 1853 the colonising associations had been wound up, and the European population of the colony was 27,600. Only 40,000 acres of land was fenced, 15,000 acres being under crop and 15,000 acres in grass. Land was being sold by the Crown at £1 an acre with higher prices in the Wakefield settlements – £3 an acre in Canterbury and £2 in Otago. Grey considered these prices too high to allow the small man to buy land and in 1853, before the first Parliament met, he issued regulations to reduce the price of rural land outside the Canterbury and Otago blocks to 10s. or 5s. an acre. The main effect of Grey's policy was not, however, to settle great numbers of poor men but to allow speculators and pastoralists to take up large areas particularly in the South Island, Hawke's Bay, and Wairarapa, where the major areas of available land existed. Those who could not afford to take up pastoral land and buy the sheep to stock it, turned to market gardening or dairying on small farms, in many cases engaging in casual work to increase their income. This was the main pattern of settlement in the early years of the provinces.

The General Assembly in 1854 authorised the Governor on the recommendation of the Superintendent and Council of any province to issue regulations to deal with Crown lands and, when the Waste Lands Act 1858 set out general conditions on which provinces could deal with Crown lands, control both of the land and of the revenue passed into the hands of the Provincial Councils. The need to obtain the Governor's approval to provincial regulations ensured that there was a degree of uniformity in the settlement policies of provinces but, within this framework, varied methods were followed. Auckland introduced the sale of rural land on credit, and Wellington adopted a similar method of sale on deferred payments. Auckland and Otago adopted a ballot system for dealing with two or more applications for the same land, but later followed the pattern of offering land by auction used in the other provinces.

Military settlements were a feature of some North Island provinces, concessions being granted to encourage retired military and naval officers to settle and strengthen the position of other settlers. Auckland made concessions to encourage general immigration, and authorised grants of land to school teachers. Provincial governments also contracted with individuals who, in turn, promoted settlement.

The growing stream of immigrants built up pressure around Governor Thomas Gore Browne. Much land was held by speculators who were asking prohibitive prices for it and the new settlers looked to the Crown for cheap land. This demand coincided with the rise of Maori nationalism, and increased resistance to the sale of land led to fighting in Taranaki which brought farming almost to a standstill in the mid-1850s. It spread to other areas and was still going on when Grey was recalled in 1861 for a second term as Governor.

In 1864, with the bulk of the fighting over, the Government confiscated 3 million acres of Maori land mainly in the Waikato, Taranaki, and Bay of Plenty. In the long run some was returned to the Maoris and some was purchased by the Crown, so that only about half of this area was actually confiscated. In 1862 the Crown's right to pre-emption of Maori land had been abolished and was not resumed until 1892. Thirty years of uncontrolled dealing, coupled with Crown purchases and the confiscation, made great inroads into Maori land. Maori Land Courts issued titles to the Maori owners who were then free to sell to the Government or settlers and, as a Royal Commission reported in 1891, the Maori owners “were surrounded by temptation. Eager for money wherewith to buy food, clothes, rum, they welcomed the paid agents who plied them always with cash and often with spirits”. The Commission commented that “such alienations were generally against the public interest, so far as regards settlement of the people upon the lands. In most of the leases and purchases effected the land was obtained in large areas by capitalists”.

The overall result of provincial legislation was that in 20 years to 1876, 8 million acres were sold for £76 million and another 2 million acres were disposed of under free grants mainly to those who had served in the military forces.