In a narrow street beside the great river called Thames lived a grey-bearded man from the North Country. His name was Sir Ian but his powers of transformation were so extraordinary that he was rumoured to be a wizard.

Some swore that he was none other than Gandalf, from the highest reaches of the Council of Elrond. Others called him McKellen and claimed he was the best Macbeth they had seen. He had lived in Narrow Street for a quarter of a century, during a time of great change in the region known as Limehouse, dangerously close to the influence of the Dark Doctor, David Owen, and the inferior wizard Steven Berkoff. In the fifth year of the New Millennium there were sightings of him in a fabled street of the Industrial North, where he briefly went by the name of Mel Hutchwright.

Not for long, of course. McKellen has never vanished for long during his 40-year progress to the top and beyond. He re-emerges now as a sexually repressed shrink in a screen adaptation of Patrick McGrath’s novel Asylum. Then there’s the movie of The Da Vinci Code, in which he plays the British aristocrat Sir Leigh Teabing, and then King Lear as part of the Royal Shakespeare Company’s staging of all the dramatist’s plays within 12 months during 2006 and 2007.

Because of the cosmic phenomenon that is The Lord of the Rings, you half expect to find that McKellen has undergone some more permanent transformation these past few years. Serious film success – don’t forget he’s also Magneto in the X-Men series – can do strange things to British actors ascending from the stage to the international screen. Maybe he’s gone grand, like Olivier did, or troubled, like Burton, or remorseful, like Hopkins.

Like all these actors he came from unspectacular beginnings, was extravagantly gifted, worked hard on his trade as a young man and used the breaks when they came.

He saw shows at the Bolton Grand. He acted at school. He got to Cambridge, coincided with Corin Redgrave, Trevor Nunn and Derek Jacobi, for whom he harboured an undeclared passion. For Sir Peter Hall and Sir Richard Eyre, directors of the National Theatre from the Seventies to the Nineties, shortlists for the leading player regularly consisted of his name alone. Largely because of Gandalf, McKellen gets recognised all over the world. Not just by children but by legends as venerable as Everest summiteer Sir Edmund Hillary, who sought him out when The Lord of the Rings was filming in New Zealand.

The first sign today that things haven’t changed that much is the house itself. Nice enough, but no mansion. More to the point, he’s just got the one. No done-up Old Rectory in the Cotswolds. And even if there were, there’s no car to speed him there after the Saturday show. True, the Narrow Street house is on five floors, but the storeys are narrow as well, basically one long room each, with not a door in sight, so that music played in the basement can be heard at the top. The living room goes straight through from the front door to the picture window and terrace at the back, where there is a hammock and a bike.

On the coffee table is a copy of Vogue Hommes and the modish gay mag, Attitude; on the shelves a Teddy with a “Gandalf for President” badge, a Perspex holder containing Newton & Ridley beermats, an embroidered family tree and a photo of a young man with a belt clasp that reads “Pussyboy”. On a summer day like this one the light pours in from the sky above the big curve of water and the Georgian repro homes on the far bank.

The biggest noise comes not from the next-door pub but from barge waves breaking beneath the window and dragging back the shingle in the best Radio 4 manner.

McKellen’s accountant is forever asking him what he wants to do with all this money, but the earner of it doesn’t seem too concerned. He says he travels everywhere first class, which is “a terrific luxury”, takes taxis all the time, and is comfortable in the sense that he never has to think about money.

At one point he does wonder aloud who has made all the money from the X-Men films and also alludes to the late Sir Alec Guinness’s shrewdness in securing for himself a percentage of the Star Wars profits, rather than a flat fee. But for the rest of the time it would be hard to question his assertion that he never went into acting for the money and is not about to start now.

In fact, he is scaling down, no longer working every month of the calendar in the manner of a true workaholic (his word).

He is 66 and there have been some health issues. As both of these – chest and prostate – are strangely tied up with his stint as Widow Twankey at Kevin Spacey’s Old Vic last Christmas, a full explanation has to wait. Briefly, there was a nasty moment when things showed up on an X-ray like shadows on his lungs, but they turned out to be nothing more sinister than his nipples.

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