Found out in December that I have corrosion on nsr floor could this be water coming in through boot as seem to get water in spare wheel well. Saw a post on here that someone drilled out two holes to drain water. Does this actually work. And are there any dangers under the wheel well to be aware of before drilling holes in it? 

Just bought a 2006 Jazz with the same problem. Personally, I think drilling holes might drain the water out, but it's also another way for the water to get in.
After looking at lots of Youtube posts, I traced the issue to cracks in the sealing putty between the rear side and boot panels (near the boot hinges). I've cut out the sealer with a dremel and filled the gaps with Araldite Steel 2-part epoxy. Photo attached shows the original crack.

This is how it looks after the Araldite, before paint.