Early settlement fell into two classes – the large pastoral holdings and the small holdings on which the occupiers were no more than part-time farmers. Closer settlement was hindered primarily by poor transport, and this problem was tackled vigorously by the Central Government on the abolition of Provincial Government in 1876. The maze of provincial land legislation was replaced by the Land Act 1877, which repealed 56 existing land statutes and provided a uniform system of dealing with Crown land. Administration was vested in a Minister of Lands, a portfolio first established in 1858 but which had lapsed between 1864 and 1872. The provinces were replaced by land districts and a Land Board was appointed for each with a Commissioner of Crown Lands as chairman responsible to the Minister. These replaced the Commissioners and Waste Lands Boards of the provinces. The new Act provided for Crown land to be sold for cash or on deferred payments with conditions requiring improvements and personal residence. Special conditions applied to pastoral runs in Canterbury and Otago, leases being offered at auction and occupiers being given the right to freehold land around their homesteads.

The system followed in disposal of land was of free selection, and particularly in Canterbury and Otago a great deal of aggregation took place, despite the efforts of men such as Donald Reid and Sir John McKenzie. Pastoralists retained their holdings without great financial outlay by “grid ironing” the properties – purchasing the freehold of key areas, thus making the leased areas unattractive or inaccessible to others – and by “Dummyism” – the engagement of unemployed – to purchase land on their behalf and to fulfil residence requirements. Successive Ministers of Lands endeavoured to discourage the widespread land speculation and encourage closer settlement. William Rolleston in 1882 introduced legislation to stop the sale of Crown land and establish a 30-year perpetual lease with right of renewal, but the Legislative Council added a right to purchase. In 1885 John Ballance introduced the small grazing run lease under which much rough, broken bush country was settled. He also introduced a special settlement system under which associations of settlers cleared virgin country and balloted among themselves for specific areas. Another experiment was the village homestead special settlement system which coupled a perpetual lease of up to 50 acres with finance for improvements – £20 for a house and 2 10s. an acre to help clear, grass, and fence the first 20 acres of bush land.

Small farming still did not thrive, the economic situation and the importance of wool as the major export leaving the emphasis on the large property. The period of Central Government between 1876 and 1890 had perpetuated the sale of Crown land, and by 1892 most of the readily accessible land had been disposed of: 13·6 million acres was freehold and 14·2 million acres was leased from the Crown, of which 11·8 million acres was held on pastoral lease.