THE MAGIC COTTAGE By James Herbert New American Library. 325 pp. $17.95

"You've seen the film, you've read the book. You know the one -- there've been so many: The young couple find the home of their dreams, the wife's ecstatic, the husband's happy but more controlled ... But we know there's something sinister about the place, because we've read the blurb and paid our money. Slowly, THINGS start to happen ... You know it like you wrote the story yourself.

"Well, this is similar. But different. You'll see."

This excerpt from the beginning of "The Magic Cottage" neatly summarizes the novel's setup and typifies its engaging, self-aware narrative voice. That voice belongs to Mike Stringer, "skeptic and part-time infidel," who, along with his lover Midge Gudgeon, moves into Gramarye cottage at the beginning of this, the 12th novel by Britain's best-selling writer of horror fiction. Nestled in the New Forest in Hampshire, Gramarye draws Mike and Midge from the city like a magnet. For Mike, a musician who plays in backup groups, and for Midge, an illustrator who specializes in children's books, Gramarye is a haven, their "first proper home."

Amid the joyful tumult of settling in, Mike and Midge overlook the unreal elements of life in Gramarye -- structural defects in the cottage seem to disappear, injuries and wounds heal miraculously overnight, the neighborhood birds and animals are unnaturally bold. Even a visit from three members of a nearby pseudo-religious cult called the Synergists doesn't spoil their idyll. The Synergists seem friendly enough, and their founder and guru, a former toy manufacturer with the unlikely name of Mycroft, appears to Mike disarmingly bland: "This guy was medium height and paunchy, skin smoothly unblemished; almost, but not quite, characterless ... He could have been anybody's favorite uncle."

But Mycroft is evil, a necromancer with designs on Gramarye, and the cottage is a focal point for ancient, incorporeal forces of which Mike and Midge are wholly unaware. Although they experience moments of subtly altered perception, sensory distortion and "abrupt and unnatural lucidity," neither realizes the extent of Gramarye's influence. But they are unwittingly being drawn into a classic confrontation with evil, a battle for their happiness, their freedom -- and for the power of Magic.

This situation is reminiscent of a fairy tale, and Herbert builds his novel around canonical elements: the damsel in distress (Midge), the stalwart hero (Mike), the evil magician (Mycroft), and, of course, the enchanted cottage. And he reinforces this storybook ambiance with allusions to witches, spells, pixies and other staples of the fairy story. But he embeds these accouterments in a primarily realistic novel set in present-day England, ultimately transmuting his fairy story into something generically quite different.

As Mycroft worms his way into Mike and Midge's lives and the battle lines are drawn, "The Magic Cottage" evolves seamlessly from fairy tale into ghost story -- and comes into its own. Herbert eschews the gore and shock tactics of his earlier novels, relying instead on his characters to carry the story. Through Mike's narrative voice, Herbert disarms and distances us with clever allusions to genre conventions, all the while letting the undercurrent of unease that courses through the novel's early chapter surface naturally. And when his beautifully orchestrated crescendo of suspense peaks, the scares have the genuine shivers-down-the-back-of-the-neck quality of the great ghost stories of Shirley Jackson or M.R. James.

The main reason "The Magic Cottage" works so well is that its characters come to life. When Mike has a hallucinatory experience in Gramarye and Midge's unacknowledged anxieties over the unreality of their storybook existence erupt in rage, the scene rings true. And later, when their involvement with the Synergists threatens their relationship, we care for them as we would for a couple of close friends.

During its final chapters, the novel metamorphoses once again, from ghost story to horror show, and Herbert whips up a slam-bang, effects-filled finale that is great fun. But what lingers after the dust has settled and we've put the book aside are our memories of Mike and Midge -- and those scares. Moments of genuine frisson are rare in the modern horror novel, which suffers from bestseller bloat and a surfeit of violence and gore. The good news is that James Herbert has brought the shivers back to the genre.

The reviewer, a professor of physics at the University of Oklahoma, is the author of "After the Danse: Horror Fiction in the Eighties."