Cannot change layout! - Layout mode is showing redered page

Hi

I installed the latest version of T3 b3 blank template (2.2.1) and I am having problems changing the layout through the layout mode.
When I go to layout mode, the page (where the blocks are shown) is presented as my rendered webpage: I am seeing my rendered homepage on the layout section where I would be chaning blocks position and names.

I tried clearing cache, reseting positions, changing themes, what is wrong? What am I missing? Is there a button to disable rendered output?
Attached is an image of the problem.

Thank you