SensitivityLabel parameter no longer applied when creating SharePoint Team Sites via SPSiteManager/create API

[joostvdlinden]

Target SharePoint environment

SharePoint Online

What SharePoint development model, framework, SDK or API is this about?

SharePoint REST API

Developer environment

Windows

What browser(s) / client(s) have you tested

• 💥 Internet Explorer
• 💥 Microsoft Edge
• 💥 Google Chrome
• 💥 FireFox
• 💥 Safari
• mobile (iOS/iPadOS)
• mobile (Android)
• not applicable
• other (enter in the "Additional environment details" area below)

Additional environment details

I am running the REST API queries from a Microsoft Azure Logic app (Consumption type). Authentication is through an app registration and self-signed certificate.

Describe the bug / error

Hello,

I was referred to GitHub Community from Microsoft Q&A for this issue:
https://learn.microsoft.com/en-us/answers/questions/5959544/sensitivity-no-longer-getting-applied-to-new-share

Environment

• SharePoint Online
• Team Site without Microsoft 365 Group
• Site creation through SharePoint Online REST API
• API endpoint:
  https://-admin.sharepoint.com/_api/SPSiteManager/create

Request body:

{
"request": {
"Title": "Site name",
"Url": "/sites/MyUniqueSiteAddress",
"Lcid": 1043,
"Description": "Description of how this site will be used",
"WebTemplate": "STS#3",
"Owner": "owner@domain.com",
"SensitivityLabel": "SENSITIVITY-LABEL-GUID"
}
}

Problem
This implementation has been working successfully since approximately April 2026. Sites are created almost daily through an automated provisioning workflow.

Until July 15, 2026, newly created sites automatically received the sensitivity label specified in the SensitivityLabel property.

Since July 15, 2026:

• Sites are still created successfully.
• The API still returns HTTP 200.
• The response still contains SiteStatus = 2.
• No errors are returned.
• The created sites no longer receive the sensitivity label.
• As a result, the sites cannot be externally shared because the label settings are not applied.

Observations

• No changes were made to the provisioning workflow.
• No changes were intentionally made to the request payload.
• No known changes were made to the Purview sensitivity label configuration.
• Existing sites created before July 15 still have their sensitivity labels applied correctly.
• The issue occurs consistently for newly provisioned sites.

Questions

1. Has anything changed in the SPSiteManager/create endpoint regarding the SensitivityLabel property?
2. Is the SensitivityLabel parameter still supported for STS#3 sites?
3. Are there any known service changes or regressions around mid-July 2026 that could explain this behavior?
4. Is there a recommended alternative method to assign a sensitivity label during site provisioning?

Any guidance would be appreciated.

Kind regards,

Joost van der Linden

Steps to reproduce

1. Create a SharePoint Team Site (STS#3) using the SharePoint Online Admin endpoint:

   POST https://-admin.sharepoint.com/_api/SPSiteManager/create

2. Include a valid SensitivityLabel GUID in the request body:

   {
   "request": {
   "Title": "Test Site",
   "Url": "/sites/TestSite",
   "WebTemplate": "STS#3",
   "Owner": "owner@domain.com",
   "SensitivityLabel": ""
   }
   }

3. Submit the request and wait for site provisioning to complete.

4. Verify that the API request succeeds:

   • HTTP 200 is returned.
   • SiteStatus = 2 is returned in the response.

5. Open the newly created SharePoint site.

6. Navigate to Site Information or check the site properties through PowerShell, Microsoft Graph, or the SharePoint Admin Center.

7. Observe that no sensitivity label has been assigned to the site, even though a valid SensitivityLabel value was provided during creation.

Expected behavior

When a SharePoint Team Site (STS#3) is created using the SPSiteManager/create endpoint and a valid SensitivityLabel GUID is provided, the specified sensitivity label should automatically be applied to the newly created site.

This was the observed behavior in our environment until approximately July 15, 2026. The sensitivity label was applied during provisioning and the site's governance settings (including sharing restrictions associated with the label) became effective immediately after site creation.

The expectation is that the SensitivityLabel property continues to be honored by the SPSiteManager/create API and that newly created sites receive the specified sensitivity label without requiring a separate post-provisioning action.

[Ashlesha-MSFT]

Hello @joostvdlinden
Thank you for bringing this issue to our attention. We will look into it and get back to you shortly.