Wheel Arch Rust Assessment (Prior to purchase)

Kidcreation, assuming you have not yet paid any money as deposit or outright purchase, I would make the following observations:
1. Whilst that rust could be removed, treated & painted, it looks very much like the surrounding sills and probably other areas have already been re-sprayed. If so, rust has re-appeared and that makes me doubt that the panels were properly prepared before that (cosmetic??) re-spray. If I were considering that car, I would insist on taking a good look underneath, to see what other rust is visible. The front mounts of both the front & rear sub-frames have a reputation for rotting first. There is also a notorious mud-trap at the back of the front wheel arches. Water & muck drop down the wheel-arch liner, and are trapped between plastic & steel. Rot follows.
2. How much service history, invoices or (ideally) a photo history of work being done. Cambelt changes and a properly replaced head gasket are the two "must haves" in my mind, unless the car is cheap.

Back in March 2021, I found rust in the same rear sill area as you. Photos of the rust spots and the re-spray are attached. At least your paint colour will be easier to match than my Starlight Silver!

It doesnt look too bad. MGFs / TFs are not unduly prone to serious rust in the bodywork unlike some of the cars from the same era so there is a very good chance that the arches there will be farly sound once that areas is stripped to bare metal. Are there any rust bubbles at the top of the arches or elsewhere on the car ?

As others have said do check when the cam belt was last changed and plan to change it f it was much more than 6 years ago.

How much is the seller asking ? What is the rest of the car like ?

Thanks TA22GT, and also thanks for your other comment approving of my proposed method i'm assuming these holes if small can be dealt with using your glassfibre suggestion, but at some point larger ones would require welding (and therefore professional assistance) assuming i ended up with any larger ones which of course i'd be praying against. Would i also be right in thinking it's just the lip where the bodywork folds around and not the actual "liner" surrounding the wheel arch itself? that presumably doesn't require any such treatments as its a different material? (yes i know i should have touched it while i was there andf then i'd know)
As for the rest of the car it's head gasket was done 5000 miles (2 years) ago by Trophy Cars as was the cam belt and water pump, its also had a new clutch, exhaust and stainless steel cooling pipes since then too and i didn't spot any additional rust. the underneath of the sills appeared to be black and felt very solid to the touch, i suspect the black is some sort of rust prevention treatment and it didn't appear to have bubbled (pardon my ignorance but could the black be some kind of treatment coating? and could this also be some of what can be seen where the arch meets the sill in the photo or is that just more rust?)

Thanks Airportable, off the top of my head i believe the paintcode is IAC, i do have it written down somewhere and some of these online paint places seem to at least claim they can do it so thats good. I'm hoping that because its on the inside i wouldn't need to worry about blending it in as much as you normally have to as i know that can be the tricky part and is where good painters really earn their living.
I think my biggest fear here was me not realising that this is actually very bad and could even be terminal, but if its not then i'm happy to take a go at trying to resolve it, you have to learn somewhere right?

Thanks EllisoJo, When i was looking at the car i couldn't see any signs of repaint but as i say i'm not that (read: "at all") experienced so i could be wrong, the underneath of the sills seem bubble free and strong, looked like they had possibly been treated in some way as they were black and i half assumed this "black" was also what was on some of the arches, especially where they meet the sill, though i suspect this was optimism talking.
In terms of history and invoices fortunately that's where the car shines! in the last 5000 miles (2 years) its had the cambelt and head gasket done by trophy cars, it's also had stainless steel cooling pipes which i beleive are a key upgrade for protection against this issue as well as new clutch from Rough Luck racing and a new exhaust

Thanks Notanumber, i didn't see any signs anywhere else on the car, that doesn't mean they weren't there of course and there was an advisory for front suspension arms corroded (but not weakened) so they'll need doing at some point.
The cambelt and head gasket were done 2 years ago with the car having covered 5000 miles since then, and in that time its also had stainless steel cooling pipes, a new exhaust and a new clutch.
The rest of the car seems pretty tidy from what i can tell, i don't have enough TF driving experience to know what's normal and what isn't to be honest and i assume most of the rattles fall into the category of normal, i did find the brake pedal didn't seem to have a huge amount of travel although looking back i'm wondering if i was simply not pressing it hard enough having been spoilt by modern cars and i didn't have any trouble stopping the car either way. definitely needs a new handbrake gaitor but other than that nothing really jumped out as bad.
The car has done just over 53000 miles and is currently up at £5000 though it appears the seller was trying for £6000 originally and from the way the seller was talking about wanting more easy to turn cars (fiestas etc) on his very tiny forecourt i suspect i could get a bit more off it too. It also includes the X-Power hoops and what i'm told is a rare X-Power tonneau cover designed to fit said hoops

Hiya,
Before I reply to your post on painting the arches I have to comment on the price.
I'm new to MG's but not new to fixing or restoring cars and for £5k that car should be rust free! 
Others may agree or disagree with me but it seems way overpriced to me.
I bought a 2002 TF135 this September with 34k miles that is totally rust free both on top and underneath so to me it looks overpriced.
At 5k it should have no rust and a perfect gear lever gaiter.
I'm sure others will make their own observations to help you.
Before you part with cash get a feel for what others think.

Yeah i do think the initial price he had it up for at least was definitely too much, and i'd hope i can get a bit more off, though i'm led to believe that a good chunk of this ones value comes from being the 160 version and the sunspot yellow (apparantly there were only 29 in this colour/engine combination) as well as it having had a decent chunk of mechanical work done too of course, but yeah its not a cheap one i'll grant that

I agree 100% with the "Overpriced" comment by TA22GT, especially in view of your mention of
"there was an advisory for front suspension arms corroded (but not weakened) so they'll need doing at some point"

These lower arms are notorious for collecting water & mud and therefore corrode. Either use this as a way to get the price down, or find a better deal!

I'm aiming (assuming I go for it at all) to talk the dealer down to £4000 or close to it if that makes it seem much more palatable?
The gasket, cambelt, clutch and cooling pipes give me some confidence that it's not a pup at least, though as with any used car (especially a classic, you can never be totally confident)

I wasn't trying to be rude or anything but I realise I came across as a bit abrupt.
I don't know enough about the rarity of that model but others will and I am sure be able to enlighten both of us.
Just because it is rare doesn't mean it is worth top whack..it has to be in top condition too and I get the feeling the seller is banking everything on it's rarity as if that overcomes condition.
I got lucky and bought the right car and I love it..I am learning about it as I go along but I absolutely love driving it. They are fun cars and I am sure you will love ownership of one. 
Lets make sure this is the right one.

     

Hiya...a few pics of my car..only to show you what is out there and not to say " look at me"...I'm concerned you get bitten! 
You can pick up a really, really ggod MGF or TF for £3k all day long privately.
When I researched buying an MGF TF I wanted a 160. Was dead set on that but a lot of those I looked at for sale looked tired or thrashed, not all, so I widened my horizon and found this car.Almost fsh  34k and £2200. The seller wouldn't budge on price because he knew it was a really solid car.
It doesn't bother me in the least that it's not a 160 because I can pedal this thing really fast without ever thrashing it.

The black sills on that car look like it is black Stonechip which needs to be lacquered because it is not waterproof and it looks like it is washing off..underseal doesn't wash off. Most people would stonechip it in white and then paint it the body colour..to me it is hiding something.
I have a car up for sale that is not a MG but is a limited edition of the model. I am asking 5k but it is pristine everywhere and a good solid car for someone to enjoy.
I enclose a pic so you can see the quality you should be seeing if you are spending £5k on a 22 yr old classic car.
THIS IS NOT A FOR SALE AD! 
Mods please remove it if I have broken forum rules! It is to show the OP that the yellow car is not in that league!