By far the most common place to find rust on a MKI. The rear wheel arches have a tendancy to rust, particularly in colder climes where salt is used on the roads in winter. This is more of a problem since the panels are welded on (rather than bolted) and so are more difficult to replace.
Replacement arches are available from:
Basically, the two skins of the rear panel are joined at the lip and inside this there is a long piece of sponge, which serves as an excellent moisture and muck trap, keeping the steel in that area under the best possible conditions for rusting. If you've got good wings then to keep them that way the only thing you can do is religiously clean out the inside of the rear arch lip with fresh water, especially in the winter when there's salt on the roads.