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The fire quickly engulfed the wood and stone building, forcing Kate and her family to escape in their night clothes. Branson's 90-year-old mother and his daughter Holly were present in the spacious eight-bedroom property.
Branson himself was on the island with wife and kids and he ran towards the burning house in a bid to try to avoid any casualties.
In order to make a quick exit, Kate reportedly scooped up Branson's mother and rushed out. The house sits on Necker Island that's owned by Branson.
The island is usually rented out in its entirety and can sleep up to 28 people in the main house and six Balinese villas scattered over the grounds for $ 34,000 a night all inclusive.
Sir Richard, 61, was staying in another villa around 100 yards away with his wife Joan and son Sam and apparently ran naked towards the flames shortly after 4am.
The entire house is completely destroyed and the Branson family has lost important documents and precious photographs. But Sir Branson is upbeat and has resolved to build a new house in the spot along with his family and staff.