1.16 "Floating Islands" world terrain generation issue

When loading a new world using the new Floating islands world preset, the villages will spawn randomly in the void. I think the game is trying to spawn them at ground level but is unable to find land so is spawning them at Y=0. I took a screenshot below, It's a big issue if anyone wants to use the world preset as a survival so I hope it gets fixed.
EDIT: This also happens to Pillager Outposts