My XML layout is not rendering with this error message. I am already using Java 8.
Also using latest build tools in Gradle.
and
I got the same error you describe but on OS X. I know this may not solve your problem (because I don't know the equivalent for Windows), but since this is not OS specific I am leaving the solution for any OS X fellow out there.
Edit the file /Applications/Android\ Studio.app/Contents/Info.plist, and remove the 1.6 version (in my case), you may place 1.6+, 1.7+ or 1.8, whichever you prefer. Mine ended up like this
...
JVMVersion
1.7+
...
Be aware there's an incompatibility with drag and drop with java versions 1.8_60 to 1.8_75 (IDEA-146691) which the IDE will report once you successfully change the version.
For non Terminal Users
Android Studio.app file. If it's in the dock you can right click it and choose Options > Show in Finder.Show package content. Contents/Info.plist).