Embattled Perth home builder Nicheliving has suffered another major setback after losing their legal ability to undertake construction works, in news that will leave dozens of customers frustrated.

Western Australia's building regulator confirmed Nicheliving's parent company Projex Management and Construction no longer have a nominated supervisor, which is legally required for any registered building contractor to operate.

Without a nominated supervisor, Nicheliving still remains registered but cannot carry out building works that are valued above $20,000 and require a building permit.

A spokesperson for the Department of Energy, Mines, Industry Regulation and Safety said Nicheliving has advised it intends to appoint a new nominated supervisor.

Housing Industry Association WA executive director Michael McGowan said Nicheliving's ability to find a replacement would depend on their relationships within the industry.

"Obviously, a company will go through a recruitment process to find a new nominated supervisor [and] there may be people in industry looking for the next opportunity that may wish to take on a piece of work," he told ABC Radio Perth.

Mr McGowan said the situation was not uncommon, but big companies often had more than one person to take on the role.

"They'll tend to have two or three people who have their builders' practitioners license so that they can step in to take over if that person chooses to leave and go and pursue other opportunities," he said.

WA Treasurer Rita Saffioti said the development was concerning.

"There's some discussion being had between the relevant building authority and Niche currently, [but] we're very concerned in relation to the conduct of Niche more generally," she said.

Cost recovery claims

The news is the latest setback for the troubled builder, after a credit check last week revealed it had been issued a notice by the Australian Taxation Office for almost $4 million.