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Thatch is the dense spongy layer at the base of your lawn made up of tightly interwoven or compacted stems, leaves and roots. Lawns with high levels of thatch (2 cm or more) can create an environment in which disease and insect pests thrive.
Some thatch (less than 2 cm) is good for your lawn. Soil dwelling organisms break the thatch down into humus which helps nourish both the grass and the beneficial organisms in the soil which helps keep the soil and the grass healthy. If the thatch builds up faster than it is broken down and it exceeds 2 cm depth, the layer can begin to cause problems for the lawn; the lawn becomes spongy and retains moisture that encourages fungal disease of the grass, insect pests can harbour in the thatch, the grass struggles to grow through the thatch and oxygen is less able to penetrate the soil below and roots and beneficial organisms may suffer in anaerobic conditions.